THE departure last week of former Hydro One CEO Mayo Schmidt — the so-called $6-million man — made for great political theatre, and gave Premier Doug Ford a chance early in his tenure to appear to be putting his money where his mouth is.
During the spring election campaign and well before that, Ford vowed to get rid of Schmidt — an otherwise capable man whose exorbitant pay-packet became a glaring symbol of bloated, out-of-control compensation for executives in the public sector.
Technically, this was not accurate: by the time Schmidt left the position, Hydro One had long been turned into a private company with its own board of directors. But the province remains its largest shareholder, which gave the public the impression at least that Schmidt was effectively still working for the taxpayer. Ford exploited that impression for political advantage; in the end, the province can still bring about changes at the utility’s top when it wants to, independence or no.
According to Ontario’s NDP, Schmidt’s removal didn’t come cheap. The Official Opposition claims, as a result a “backroom deal” — the details of which Ford reportedly doesn’t want the pubic to see — Schmidt leaves with a cool $9 million.
What many people likely didn’t know when Schmidt’s salary was making almost daily headlines was two other members of the utility’s senior management team were each raking in salaries in the $2-million range.
Paying that kind of dough, when the premier himself comparatively makes a mere $200,000, is absurd. According to Hydro One, there have been no other changes to the management team in the wake of Schmidt’s departure. (Information about management salaries at the utility is contained in the utility’s detailed and refreshingly transparent annual report to shareholders, which was released in May.)
Ford could eliminate a few other senior positions in the same manner as Schmidt was ousted, making for more theatre and allowing him to score a few more brownie points with his Conservative supporters.
But the issue is, what amount is fair and reasonable? More to the point, what is sustainable in a province saddled with more than $300 billion in long-term debt? Could someone, on Ford’s salary, say, manage a utility with a built-in customer base that essentially runs itself? How many transformers did Schmidt’s team install?
The salaries of Schmidt and his former colleagues — albeit on the extreme high end — are the tip of the iceberg of a much greater fiscal conundrum. The real hard work, which Ford’s predecessors refused to countenance, is going to require a thorough analysis of public-sector salaries in general.
To wit: Is it sustainable to pay directors of small school boards more than $150,000, or college presidents more than $200,000, or hospital executives who perform no health care more than $350,000?
Across a myriad of provincial departments, there are many talented people in management, or working at a high level.
But as the debt and the astronomical interest on that debt balloons, we are going to have to face the fact that we can longer afford to pay them top dollar.
The removal of one high-paid hydro executive doesn’t change that a bit.