Desmarais brothers’ compensation surged 35 per cent to $7.7 million each in 2013


MONTREAL – Power Corp. is urging its shareholders to once again reject a proposal that would give them a say on the way its top executives are paid.

The shareholder rights group MEDAC is urging the Montreal-based firm (TSX:POW) to conduct an advisory vote by shareholders, a practice followed by many companies, including Canada’s large banks. A similar proposal last year was rejected.

“An advisory vote on senior executive compensation is a basic element of shareholder democracy and allows the board of directors to ensure that the shareholders are satisfied with its compensation policy, to maintain a good dialogue with its shareholders regardless of the number of shares they hold, and to avoid tense relations between the parties that could tarnish the corporation’s image in the industry,” it said in one of three proposals to be voted on.

According to a regulatory filing ahead of Power Corp.’s annual meeting on May 15, Power is urging shareholders to reject the motion.

It says setting executive compensation is an “increasingly complex” task that is designed to support the company’s main objective of generating value for shareholders over the long term.

“The board believes that the corporation’s directors and the compensation committee are in the best position to oversee the executive compensation arrangements of the corporation,” it responded.

The motions will be voted on at the first Power Corp. annual meeting since the October death of Paul Desmarais Sr., who built Power into a multibillion-dollar business empire that includes Great West Life (TSX:GWO), IGM Financial Inc. (TSX:IGM) which offers Investor Group and Mackenzie mutual funds, and media interests that include partial ownership of The Canadian Press.

The Desmarais family trust holds or controls 99.49 per cent of participating preferred shares and 11.76 per cent of subordinate voting shares of Power. Each participating preferred share is entitled to 10 votes and each subordinate voting share is entitled to one vote.

Barrick Gold Corp. (TSX:ABX) is revamping its executive compensation, shrinking the annual bonuses it pays and increasing the focus on long-term results a year after the gold miner’s shareholders, including institutional investors led by the Caisse de depot et placement du Quebec, opposed the company’s approach to executive compensation.

Meanwhile the proxy filing said Power chairman Paul Desmarais Jr. received $7.66 million of compensation last year — $5.12 million from Power and $2.5 million from its top subsidiary, Power Financial (TSX:PWF). That compared with $5.77 million in 2012 and $5.2 million in 2011.

Deputy chairman Andre Desmarais received $7.74 million — $5.38 million from Power and $2.36 million from Power Financial. That compared with $5.77 million in 2012 and $5.37 million in 2011.

Each brother received $1.1 million in salary from both companies, $187,500 in share-based awards, $3.08 million in option-based awards, $1.75 million in bonuses and between $548,000 and $641,000 in other compensation.

John Rae, executive vice-president of Power Corp., received $973,416 in total compensation, up from $900,681 in 2012. Vice-chairman Henri-Paul Rousseau received $1.8 million last year from both companies, up from $1.58 million a year earlier.

Power’s net earnings attributable to participating shareholders were $977 million or $2.12 per share last year, compared with $816 million or $1.78 per share in 2012.

Meanwhile, Power Financial CEO Jeffrey Orr’s total compensation last year was $11.2 million, up 11 per cent from 2012 and nearly 43 per cent from $7.8 million in 2011. His salary increased 2.4 per cent to $4.134 million. He also received $2.2 million share-based awards, $1.96 million stock options, $500,000 in long-term incentives, $1.95 million in pension value and $440,000 in other compensation.

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