Peter Kuitenbrouwer, with file by Paul Brent
National Post
July 24, 2002

Senior executives at Ontario Power Generation Inc., which generates the bulk of Ontario’s electricity, are getting paid far too much money given the disastrous performance of the company, a top critic of the province’s energy policy said yesterday.

Tom Adams, the executive director of Energy Probe, a Toronto-based think tank, called OPG compensation levels "the next shoe to drop" in continuing scrutiny of the successor companies to Ontario Hydro.

"If we’re concerned about unearned bonuses and unrealistic compensation, let’s look at OPG," says Mr. Adams. "I’m much more upset about the behaviour of OPG than Hydro One."

Last Friday, Glen Wright, interim chairman of Hydro One, fired Eleanor Clitheroe, Hydro One’s chief executive, alleging misuse of the company funds on limousines, home renovations, car allowance and other expenses.

Hydro One distributes the power generated by OPG.

Last year, Ron Osborne, the president and chief executive of OPG, earned $1.66-million ($825,000 base salary, a $752,813 bonus and $81,841 in other compensation).

This year, he got an additional long-term incentive program payout of $587,500.

By contrast, Ms. Clitheroe last year earned $2.18-million ($750,000 base salary, an $806,250 bonus and $625,930 in other compensation, including $172,484 vacation pay).

In May, OPG, which produces 80% of Ontario’s electricity, announced its worst performance.

In the first quarter of 2002 it posted a loss of $217-million, compared to a profit of $102-million in the first quarter of 2001.

OPG also announced new delays in bringing the Pickering A nuclear reactor into service and said the project would cost about $2-billion, $800-million more than original estimates.

"They’re failing to deliver," says Mr. Adams.

"Their promises are no good. It’s having an impact on consumers and we can see it in prices today, and yet these guys are taking home huge bonus cheques.

"Hydro One has performed poorly but Hydro One had done much better than OPG," he adds.

Mr. Osborne could not be reached for comment yesterday. John Earl, a spokesman for OPG, says Mr. Osborne has promised to waive bonuses for top executives if the poor performance at his company persists.

"The bonus was for the year 2001. The board of directors believes that that was an appropriate bonus," says Mr. Earl. Referring to the pay scales, he adds, "You’re talking about an energy company comparable to the large companies in North America."

Graham Brown, chief operating officer at OPG, earned $1.2-million in total compensation last year. Eugene Preston, chief nuclear officer, earned about $1.7-million in total compensation. Those amounts included "long-term incentive plan" bonuses paid out this year.

Last month OPG dropped plans to privatize the corporation through a public stock offering.

That decision could prove a boon to at least one senior OPG executive. Mr. Brown, who joined the company from National Power, the U.K. power company, has a contract clause entitling him to terminate his employment if by the end of 2003 no non-government equity has been invested in the corporation and there is no reasonable prospect of such equity investment in 2004.

According to OPG’s latest annual information form, Mr. Brown can claim $1-million plus any outstanding signing bonus and all amounts accrued under the long-term incentive plan.