Doug Ford tells us the former CEO of Hydro One, Mayo Schmidt, got “zero” severance. He says he was proud to make the announcement.
But now the Globe and Mail tells its readers Mr Schmidt is sitting on Hydro shares worth over $8 million and he could cash them in.
Does Ford have a view on this or on executive pay packages more generally?
The backgrounder put out by the Province’s newsroom yesterday makes no mention of Mr Schmidt’s shares in Hydro One.
We are told:
“Mr Schmidt and the Company have agreed to the payment of a $400,000 lump sum amount on the effective date of his retirement in lieu of all post-retirement benefits and allowances.
Mr Schmidt will not receive severance payment, requirement allowance or change of control payment.”
The Globe and Mail says
“Mr Schmidt, like other company executives, has participated in a range of long-term stock plans during his time at Hydro One. As is typical, the company awards the shares, but the executives cannot turn around and sell them in the open market. Instead they “vest” or become fully owned and saleable, when the executives continue their employment, or hit certain performance requirements.”
We learn that “only” 50,000 of Mr Schmid’s stock awards have vested. The rest – the hundreds of thousands of unvested shares - could be retained with Schmidt eventually owning them outright on their original schedule and terms.
However, the Globe and Mail reveals that under the terms of the agreement between the Province and Hydro One Schmidt could cash in hundreds of thousands of “unvested stock awards”
“at a specified (and undisclosed) price”
and these could be worth $8.2 million.
This begs a series of questions. Is Schmidt going to sit on his shares and cash them in later when the heat is off or is he going to take the cash now? And if it is the latter, how much is he going to get?
Ford made a big deal about Schmidt being the "Six million dollar man".
But as we now know, his salary was $1.2m with the bulk of the compensation package coming in the shape of Hydro stock.
Schmidt will of course be paying the CRA every cent that is due to them but it is a sad fact of life that people with stratospheric earnings can be slippery customers.
They have a million ways to keep their cash out of the clutches of the Canada Revenue Agency.
During the election campaign former MPP Chris Ballard reminded us:
“People on $14 an hour are not parking their money offshore.”
It was a nice line.
When high earners are not paying their fair share the rest of us pay more than we should.