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TORONTO – A new board of directors is in place at Hydro One just over a month after the partially privatized utility’s chief executive and entire board resigned amid pressure from Ontario’s Progressive Conservative government.
Ten new directors were named Tuesday as replacements for the company’s previous 14-member board. Former CIBC executive Tom Woods will serve as the interim board chair until the position can be filled permanently.
“This highly-qualified board has strong governance and industry experience and brings with them significant electricity, business and capital markets expertise,” acting chief executive officer Paul Dobson said in a statement. “Their oversight will help us to build on the positive momentum the company has achieved since being privatized in 2015.”
During a conference call with shareholders, Dobson stressed the board will remain “fully independent” from the government and will begin work with the management team to find a new CEO. The board will also begin to examine executive compensation, he said.
Former CEO Mayo Schmidt retired and the utility’s board resigned abruptly in July after reaching an agreement with the new Tory government.
Schmidt had become a lightening rod for resentment over rising electricity rates during the spring election campaign. Premier Doug Ford had labelled the CEO “the six-million-dollar man” and promised to fire the executive if elected.
After reaching the agreement that saw Schmidt leave the utility, Ford declared that he’d made good on his pledge.
“The CEO of hydro is gone,” Ford said at the time. “The board is gone. We’re turning the page when it comes to hydro rates.”
Under the deal reached with the Tories, Schmidt was not entitled to the $10.7 million severance he would have been entitled to if he’d been removed by the board, and instead received a $400,000 lump sum payment in lieu of all post-retirement benefits. The Opposition noted, however, that Schmidt qualified for incentives and stock options worth at least $9 million upon retirement.
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Ford spokesman Simon Jefferies said Tuesday that the new board at the utility marked progress in the government’s plan on the hydro file.
“Renewed leadership at Hydro One is an important first-step towards making hydro rates more affordable for families and job-creators,” he said in a statement.
Ford has promised to slash hydro rates by a further 12 per cent but has yet to move on policy to implement the reduction.
The Tories have, however, passed omnibus legislation that in part grants the government authority to approve executive compensation at Hydro One.
The bill requires the Hydro One board of directors to establish a new compensation framework for the CEO and board of directors in consultation with the province and the partially privatized utility’s five largest shareholders.
Hydro One was partially privatized in November 2015, and by December 2017 the province had sold off 53 per cent of its stake.
In addition to Woods, the Province of Ontario, Hydro One’s largest shareholder, named lawyer Cherie Brant, former OMERS executive Blair Cowper-Smith and former BMO executive Russel Robertson to the board.
The six directors nominated by Hydro One’s ad hoc nominating committee are former Weyerhaeuser executive Anne Giardini, former New Brunswick Power chief executive David Hay, Alignvest Capital Management managing partner Timothy Hodgson, Canada Post interim chief executive Jessica McDonald, former Sappi Fine Papers chief executive William Sheffield and Melissa Sonberg, executive-in-residence at McGill University’s Desautel Faculty of Management.
The utility’s new board was named Tuesday as the company reported a second-quarter profit of $200 million or 33 cents per diluted share, up from a profit of $117 million or 20 cents per diluted share in the same quarter a year earlier.
Revenue for the three months ended June 30 totalled $1.48 billion, up from $1.37 billion in the same quarter last year.
On an adjusted basis, Hydro One said it earned 32 cents per diluted share, up from an adjusted profit of 20 cents per diluted share a year ago.
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– with files from Ian Bickis.
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