Ontario Power Generation boss received $450K signing bonus

The relatively-new chief executive officer of Ontario Power Generation received a $450,000 signing bonus last year, a gift outlined in a recent financial filing.

Jeffrey Lyash’s five-year contract with the provincial power company also includes a $3.15-million severance payout if he’s ever fired without cause, part of which is a $50,000 budget to move back to the United States.

Lyash was appointed CEO and president of OPG last August, taking charge of a Crown corporation that produces about half of Ontario’s electricity. The company has also been preparing for an estimated $12.8-billion rebuild of the Darlington nuclear power plant in October. OPG is predicting that project will wrap up by 2026.

The province’s Sunshine List shows Lyash was paid $787,472.14 in salary last year, along with $2,488 in taxable benefits.

But a recent statement of executive compensation, filed by OPG on March 31, reveals a little more about the CEO’s pay package. In 2015, the document shows, Lyash received $319,841 in salary, $352,564 in incentive pay, $230,000 in “pension value,” and $470,119 in other compensation, for a total of $1,372,524.

The miscellaneous money appears to come from two sources. A note in the document says Lyash “received a $450k signing bonus as per the terms of his employment contract.” OPG gives him a $24,000 annual executive allowance as well, which his predecessor received.

According to OPG’s filing, the information is different from that of the Sunshine List because of the timing of incentive pay and because the public salary disclosure is limited to what’s reported annually on a T4 form.

OPG spokesperson Neal Kelly told QP Briefing that Lyash's signing bonus was included on the Sunshine List. He said the CEO had been recruited from the United States to run a company with "a heavy nuclear concentration and upcoming large capital project."

“The signing bonus was a one-time item to attract the candidate into this role in light of foreign exchange and market realities,” added Kelly. “The [compensation] package is below the 50th percentile of market for executives with the requisite skill-set to lead a company like OPG.”

To compare, Hydro One president Mayo Schmidt could potentially earn as much as $4 million when stock options are factored in. Hydro One, however, has been privatized by the province and freed from having its salaries disclosed on the Sunshine List.

Dan Moulton, a spokesperson for Energy Minister Bob Chiarelli, said the province's electricity sector "requires committed, highly skilled professionals to safely operate nuclear plants and complete large scale projects like Refurbishment on time and on budget."

OPG says in the executive compensation filing that its “philosophy” is designed to help it attract and hang on to key employees. The company’s salary structure includes a base and “pay-at-risk,” which can be earned if certain goals are achieved. Lyash’s possible incentive pay can reach 100 per cent of his $775,000 base salary, effectively doubling his wages if OPG performs well.

The level of incentive money given out depends on an employee’s performance, as judged by a corporate scorecard. The 2015 scorecard awarded points for meeting certain goals, such as having OPG’s board of directors approve the budget for the Darlington refurbishment by year’s end, which they did.

If he’s fired without cause, Lyash is entitled to two times his “total cash remuneration." Broken down, that’s $1.55 million in base salary, $1.55 million in incentive pay and $50,000 for moving expenses. Lyash was a longtime U.S. power company executive before coming north, and the relocation money is to help him return south if he is terminated. Kelly said the severance arrangement is "common" for CEOs.

Tom Mitchell, the former OPG president who retired in August, was entitled to a $3.36-million severance agreement if he was fired without cause, last year’s compensation filing shows. Mitchell was paid approximately $1.5 million in 2015, according to this year's Sunshine List (Moulton said Lyash's base salary was three per cent lower than this predecessor).

Mitchell also originally hailed from the U.S., and the 2015 executive compensation statement shows the now-departed CEO “received a $61.7k moving allowance, as per the terms of his employment contract."

OPG’s compensation was spotlighted two years ago in an unflattering report by Auditor General Bonnie Lysyk. The company has claimed it's made “substantial progress” in implementing the AG’s recommendations.

The Liberal government has been slowly moving toward compensation caps for public-sector executives, but OPG’s filing says its framework hasn’t been approved yet by the province.

"Creating compensation frameworks is a complex undertaking that must balance sector-specific considerations with the need to responsibly manage public funds," said Moulton.

To contact the reporter on this story:
gzochodne@qpbriefing.com
416-212-5913
Twitter: @geoffzochodne