Fortis posts record profits ... again

Moira Baird
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Shareholders gather in St. John's for annual meeting

When a shareholder asked about the salaries and benefits of Fortis Inc. executives, he was told company president and CEO Stan Marshall is underpaid.

Compared to the CEOs of other major corporations, that is.

Fortis held its annual shareholder meeting Tuesday in St. John's, re-electing all 12 directors from the previous year.

When a shareholder asked about the salaries and benefits of Fortis Inc. executives, he was told company president and CEO Stan Marshall is underpaid.

Compared to the CEOs of other major corporations, that is.

Fortis held its annual shareholder meeting Tuesday in St. John's, re-electing all 12 directors from the previous year.

"Consistently, the studies have show that I'm not up to the median salary for a person in my position," said Marshall in an interview.

"That's a reflection of the fact that we've grown so quickly. ... We're 10 times bigger than were 10 years ago."

In 2009, Marshall received more than $4.3 million in compensation, including salary, stocks, incentives and pension contributions. He holds 406,758 shares in the company that were worth more than $11.6 million as of March 31.

Sharehold returns

Since 2000, Fortis' assets have grown from $1.4 billion to $12.2 billion. The bulk of that increase has come from Fortis' westward expansion into electric and gas utilities in Alberta and British Columbia.

"Over the past decade, Fortis has delivered an average annual total shareholder return of 18 per cent, which is the highest in our sector," Marshall told a roomful of shareholders.

"A $100 investment in Fortis at the beginning of ... the year 2000 was worth more than $500 at the end of 2009."

Shareholder Derrick Hutchens wanted to know why the company compares itself and the salaries and benefits of its executives with those of 23 other companies that are "not in the same ballpark or same game that we are in."

Fortis director Roy Rideout agreed there are "no companies exactly like Fortis in Canada."

He said Fortis compares itself with companies of similar size and complexity, though they're not necessarily the owners of regulated utilities.

"This is why we use our consultants to come up with these comparative companies and find how these companies pay their executives," Rideout said.

"Their findings are that we, by and large, pay our executives just about right - with the exception of the CEO.

"The bad news is ... according to our consultants, we seem to be under-paying our CEO. But the good news is Stan's not complaining a lot about that. So we're waiting for that shoe to drop."

Rideout chairs Fortis's human resources committee, which oversees the adequacy of salary and benefits provided to senior management.

Record profits

Hutchens said he was "relatively pleased" with the answers he received. He has substantial holdings in Fortis and regularly attends the company's annual meetings.

"I work my vacation around it," he said following the meeting. "It's a great company. There's no doubt it's been well run. It's been very, very profitable over the years.

"Mr. Marshall has done very well for himself personally, but not only that, he's done very well for all shareholders."

For a 10th year in a row, Fortis posted record earnings - $262 million in profits on revenues of more than $3.6 billion last year. That growth works out to $1.54 per share.

In 2008, Fortis earned $245 million on more than $3.9 billion in revenues - or $1.58 per share.

Barry Perry, Fortis' vice-president of finance and chief financial officer, attributed some of the company's record earnings growth to increased rates of return at two utilities - FortisAlberta and B.C.-based Terasen Gas.

Those western Canadian subsidiaries are among the company's four largest utilities.

Headquartered in St. John's, Fortis is in power distribution business - running regulated electric utilities in five Canadian provinces, Belize and the Caribbean, along with a gas utility in B.C.

Newfoundland Power

In this province, Fortis is better known as the parent company of Newfoundland Power. The utility ranks fourth in size behind Terasen, FortisAlberta and FortisBC.

Last year, Newfoundland Power posted earnings of $32 million on revenues of $527 million. In 2008, the utility netted the same earnings on revenues of $517 million.

Through its subsidiary, Fortis Properties, the company also owns a variety of office buildings, retail space and hotels.

Fortis Properties generated profits of $24 million on revenues of $218 million last year - up from net earnings of $23 million and revenues of $144 million in 2008.

That increase was partially driven by the Sheraton Hotel Newfoundland in St. John's and last year's acquisition of a Holiday Inn in Windsor, Ont.

Fortis acquired the Sheraton in late 2008 for $22 million. Since then, the company has spent $3.2 million renovating the lobby and rooms, according to its annual report. It plans to continue improvements to the guest rooms, food and beverage outlets, and meeting spaces throughout 2011.

Exploits River

Fortis also holds a 51 per cent ownership stake in the hydro-generating project, Exploits River Partnership.

AbitibiBowater, which is under bankruptcy protection, held the other 49 per cent until it was expropriated by the provincial government in December 2008. These days, Nalcor Energy is managing the asset.

Nalcor also started making payments on the partnership's $59-million term loan, according to Fortis' first-quarter report issued last week.

"Ultimately, you have to be compensated in one form or another. I don't think it's going to happen any time soon," Marshall said.

"Meantime, the plant is there and I think the province, rightly so, is trying to (put) interim measures in place to make it as stable as possible until it's resolved."

Marshall couldn't say when a resolution might occur.

Over the next five years, Fortis is planning to spend $5 billion on capital projects - mostly on its utilities in western Canada.

"I suspect that's conservative because we have other projects that have not been approved and are not reflected in those numbers. That $5 billion is our basic business," said Marshall.

"I wouldn't be surprised to see that be closer to $7 billion over the next five years."

Fortis stock closed at $28.08 Tuesday on the Toronto Stock Exchange - up seven cents over the previous day's trading.

mbaird@thetelegram.com

Organizations: Newfoundland Power, Sheraton, Terasen Holiday Inn Exploits River Partnership AbitibiBowater Toronto Stock Exchange

Geographic location: St. John's, Canada, Alberta British Columbia Belize Caribbean B.C. Windsor Exploits River

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Comments

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Recent comments

  • Andrew E
    July 02, 2010 - 13:30

    Taxpayer must have forgot to pay the hydro bill a few months ;)

    Fortis IS something Newfoundland and Labrador should be proud of, whether you agree with their building proposal or not. Only thing bad about them is the dump that is Mount Peyton Hotel in Grand Falls-Windsor.

    It's hilarious that just because someone praises Fortis (gasp), our friends from Gander jump in attack.

    Quite frankly, Jocelyn, I think you're the one that should turn off your dad's computer and get a life.

  • John Smith
    July 02, 2010 - 13:24

    Jocelyn my dad died a long long time ago. I have always admired Fortis because we have had so very, very little to be proud of in this province. They started with NL power, yes that is true, but through that company they have steadily provided us with the lowest priced electricity in atlantic canada in some of the harshest conditions, while still having to pay the highest taxes. They took that money, and instead of doing what the call centers, and boot companies do, they invested wisely in good NL people, and in good profitable companies. They kept the HQ here, employing even more people. This is still a NL company, run by NL people, and although I honestly have NO affiliation with the company, I am proud of it's accomplishments, is that OK with you? By the way, when do you pick up your next welfare check?

  • Jocelyn
    July 02, 2010 - 13:19

    What do WE have to be proud about, John Smith? How is that OUR accomplishment? They got rich off other people's money and their monopolies. Put down your pompoms, turn off your dads computer and get a life.

  • Andrew
    July 02, 2010 - 13:16

    What a terrible company...and in NL too...what company has a right to succeed in a place like this...they deserve to be thown in the trash by city hall...we dont need their money...Imagine wanting to invest some of that profit back into st. john's....just terrible.

    You know another company thats terrible...Nolan Hall...they too want to invest in developing St. John's....simply disgusting...

    Dont you agree shannie and company?

  • diaspora
    July 02, 2010 - 13:11

    Time for NL Power to come crying for another increase. These people are unconciousable.
    Stan and Beth are doing quite well milking the people of Newfoundland and Canada.

  • Taxpayer
    July 02, 2010 - 13:09

    Yes, Fortis is a success story. Imagine buying major electric utilities in Western Canada and the Caribbean and all on the backs of the Newfoundland rate payers(suckers). After paying a rich dividend by most comany standards it has so much money that it could buy hotels and other utilities as it had so much money sloshing around in its accounts. Thank you Fortis for putting Newfoundland on the map.

  • John Smith
    July 02, 2010 - 13:08

    A true NL success story, a company we should all be proud of. If only we had ten more like this. A little sad that five or six billion will be spent out Alberta way, while here we have a city councill that spit in Stan's face, and threw 75 million dollar development into the trash.

  • Andrew E
    July 01, 2010 - 20:17

    Taxpayer must have forgot to pay the hydro bill a few months ;)

    Fortis IS something Newfoundland and Labrador should be proud of, whether you agree with their building proposal or not. Only thing bad about them is the dump that is Mount Peyton Hotel in Grand Falls-Windsor.

    It's hilarious that just because someone praises Fortis (gasp), our friends from Gander jump in attack.

    Quite frankly, Jocelyn, I think you're the one that should turn off your dad's computer and get a life.

  • John Smith
    July 01, 2010 - 20:10

    Jocelyn my dad died a long long time ago. I have always admired Fortis because we have had so very, very little to be proud of in this province. They started with NL power, yes that is true, but through that company they have steadily provided us with the lowest priced electricity in atlantic canada in some of the harshest conditions, while still having to pay the highest taxes. They took that money, and instead of doing what the call centers, and boot companies do, they invested wisely in good NL people, and in good profitable companies. They kept the HQ here, employing even more people. This is still a NL company, run by NL people, and although I honestly have NO affiliation with the company, I am proud of it's accomplishments, is that OK with you? By the way, when do you pick up your next welfare check?

  • Jocelyn
    July 01, 2010 - 20:01

    What do WE have to be proud about, John Smith? How is that OUR accomplishment? They got rich off other people's money and their monopolies. Put down your pompoms, turn off your dads computer and get a life.

  • Andrew
    July 01, 2010 - 19:56

    What a terrible company...and in NL too...what company has a right to succeed in a place like this...they deserve to be thown in the trash by city hall...we dont need their money...Imagine wanting to invest some of that profit back into st. john's....just terrible.

    You know another company thats terrible...Nolan Hall...they too want to invest in developing St. John's....simply disgusting...

    Dont you agree shannie and company?

  • diaspora
    July 01, 2010 - 19:47

    Time for NL Power to come crying for another increase. These people are unconciousable.
    Stan and Beth are doing quite well milking the people of Newfoundland and Canada.

  • Taxpayer
    July 01, 2010 - 19:44

    Yes, Fortis is a success story. Imagine buying major electric utilities in Western Canada and the Caribbean and all on the backs of the Newfoundland rate payers(suckers). After paying a rich dividend by most comany standards it has so much money that it could buy hotels and other utilities as it had so much money sloshing around in its accounts. Thank you Fortis for putting Newfoundland on the map.

  • John Smith
    July 01, 2010 - 19:43

    A true NL success story, a company we should all be proud of. If only we had ten more like this. A little sad that five or six billion will be spent out Alberta way, while here we have a city councill that spit in Stan's face, and threw 75 million dollar development into the trash.