NB Power management pay not excessive, utility claims

Executive pay at NB Power may become an issue at its annual rate hearing next month but the utility has already gone on record disputing claims salaries among its managers are bloated, as former premier Brian Gallant openly suggested in last fall's provincial election.

In responses to a series of written questions about pay levels at the utility by public intervener Heather Black in advance of its May rate hearing,NB Power released information appearing to show compensation among its managers are in the bottom 25 per cent of similar employers in Atlantic Canada.

Pay for its most senior executives, including vice-presidents, is as much as $75,000 per year lower than regional peers.

"NB Power non-union salary ranges are trending at the lower end of the annual salary range [for similar regional companies]and [worse]as the annual salary range increases," the utility wrote in explaining its position on management pay at NB Power.

However, the material does not specifically address the pay of NB Power president Gatan Thomas who, according to the latest available public accounts, earned just below $575,000 in 2017about $300,000 more than the utility's senior non-nuclear vice-presidents.

Executive pay at the utility became an issue during last year's provincial election when then-Liberal leader Brian Gallant proposedfreezingresidential and small business power rates. Gallant suggested management downsizing and pay cuts among senior NB Power executives could pay for much of the $13 million per year in lost revenue he estimated a rate freeze would cost.

"There is not a New Brunswicker that would not be able to be convinced that there are efficiencies to be found [at NB Power]," said Gallant during the election campaign about the utility's ability to live with a freeze.

"We have no doubt we are going to be able to implement it with these slate of measures some of which are making sure that the executive management is reduced and looking at their salaries as well."

Black followed up on the issue earlier this year in a series of written questions to the utility about how executive pay is set and evaluated. The answers have been filed with the Energy and Utilities Board.

According to NB Power, it strives to pay its non-union staff the average amount earned by employees in similar positions with similar companies operating in Atlantic Canada. It alsoparticipates in an annual independent national salary evaluation to assess its compensation levels.

But its reports suggest thatin recent years wages for NB Power managers has fallen behind the 50th percentile target it has for itself among regional employers.

According to the information released, in 2017NB Power employees at the "manager" level earned $104,141about $9,800 less than the regional average. At the "director" level, NB Power employees earned $134, 516 about $26,000 below the average.

The report is less precise about pay levels of upper management but charts included in the material suggested gaps between NB Power and other employers widen as pay increases. One chart indicated that an employee at the vice-president level qualifying for $250,000 in pay at NB Power was $75,000 below the average being paid for the same job requiring the same skills elsewhere in the region.

NB Power says those numbers come from the Hay Korn Ferry annual salary survey.

Analyzed for market competitiveness

"NB Power's pay grades are analyzed against this data to assess the market competitiveness of salaries in relation to equivalently evaluated jobs," said the utility in answer to Black's questions.

"Included in this cut are organizations such as [Newfoundland]Power, Saint John Energy, Maritime Electric, [J.D. Irving Limited], Nalcor Energy, AV Nackawic, and NB Liquor Corporation."

Black asked for more specific information on evaluations that have been completed of senior executive pay by NB Power's board of directors but that information was supplied on a confidential basis and not publicly released.

NB Power claims it needs to offer competitive salaries to attract and retain top level employees and in some cases it has exceeded regional salary ranges to fill specialized positions.

In 2015 it recruited American Brett Plummer to run the Point Lepreau nuclear plant as its vice-president of nuclear and agreed to pay him $650,000 per year to take the job. It was substantially more than the presidentis paid and nearly triple what other NB Power vice-presidents were getting at the time.

NB Power's report disclosed mid-level management positions received salary increases of about about 15 per cent in the eightyears between 2009 and 2017, compared to 38 per cent among average regional employers.

Figures for upper management were not revealed although there are signs increases at those levels were more generous.

For example, according to the public accounts, NB Power president Gatan Thomas's salary increased by a minimum of $225,000 between 2010 and 2017 to finish just below $575,000.

That's an increase of at least 69 per cent for Thomas although his 2017 pay was still well behind the $695,000 earned in 2017 by Nova Scotia Power president Karen Hutt.