CPPIB: Lose billions. Make millions

Bonus bucks for CPP honcho
Critics call huge salaries 'outrageous'

By PETER ZIMONJIC, NATIONAL BUREAU
Ottawa Sun
May 2, 2009

It's time to play Who Wants to be a Multimillionaire Public Servant?

David Denison, CEO of the Canada Pension Plan Investment Board, is one of several Crown corporation executives to play. He saw his pay triple in three years -- taking home $7.4 million since 2005.

Denison's total pay was $1.06 million in 2005-06, including bonuses and benefits, but that soared to $4.16 million by 2007-08 -- even though the fund lost 0.3% of its value that year.

"When these millionaire public servants are earning two-, three- and four-million bucks a year, it just shows how pervasively the greed we saw in the private sector has wormed its way into the public sector," said NDP finance critic Thomas Mulcair. "It's outrageous."

INVESTING BILLIONS

The CPP Investment Board became a Crown corporation in 1997. It's responsible for investing the billions it receives every year from CPP contributions to fund government pensions.

According to the 2007-08 CPP annual report, the top four executives were paid a base salary of $1.4 million between them. When the bonuses were thrown in, that jumped to $12.4 million.

"These compensation levels are comparable to other large public pension funds in Canada," said CPP Investment Board spokesman Ian Dale. "These are market-based compensation programs and are designed to attract skilled investment professionals."

CPP executives get an annual bonus based on how the fund performed that year. But they also get a bonus based on how the fund performed over the past four years.

In 2007-08, when the fund lost more than $300 million, Denison took home a $1.2-million annual bonus and almost $2.4 million in long-term incentive bonuses.

GRIM NUMBERS

From March 31, 2008, until Dec. 31, 2008, the CPP fund lost $13.8 billion, or 13.7% of its value. The numbers for the first three months of this year will be released at the end of the month and are expected to be similarly grim.

When the Caisse de depot et placement du Quebec, the pension fund in Quebec, delivered its report last month revealing it lost $39.8 billion in the 2008 calendar year, or 25% of its value, all annual and long-term executive bonuses were cancelled.

Finance Minister Jim Flaherty has rejected opposition party calls to cancel CPP bonuses this year.

Dale said the 2008-09 executive bonuses are expected to be smaller but would still be paid because the bonus scheme is based on long-term performance, not just what happened this year.

PETER.ZIMONJIC@SUNMEDIA.CA