Executive bonus not a given: Hydro

Ashley Fitzpatrick
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Newfoundland and Labrador Hydro vice-president Rob Henderson is earning a salary of $210,000.
He also has a performance contract, allowing him to earn a bonus of $28,849 in the last calendar year, according to a representative for the power utility, in an emailed response to questions Tuesday.
"Performance contracts are determined by role and they are developed on an annual basis (and) usually cover a range of business performance indicators and initiatives in key areas such as safety performance, environmental targets, financial indicators, operational measures and employee engagement.

Newfoundland and Labrador Hydro vice-president Rob Henderson (left) joined president and CEO Ed Martin Monday in St. John’s to discuss the findings of a review on power outages and rolling blackouts that affected most of the island earlier this year.
— Photo by Andrew Robinson/The Telegram

Heads should roll, Dumaresque says

"The nature of the performance contract is specific to the individual role," the representative stated, referring to compensation at both Hydro and parent company Nalcor Energy.

"For Hydro, system reliability, and associated measures, would be used to drive performance within the company and if performance did not meet targeted thresholds, compensation would be adjusted accordingly."

An intervener in the ongoing Board of Commissioners of Public Utilities (PUB) review of the province's power system, Danny Dumaresque has called for Nalcor Energy's executive bonuses to be scrapped and for heads to roll at Hydro.

The actions would be appropriate, he argued, given the latest findings from the PUB's investigation into the rolling blackouts and sudden power outages experienced on the island, from Jan. 2-8.

In a report released Friday, the PUB stated those power problems were a result of failures of Hydro. Namely, the utility deferred preventive maintenance and testing on its key transmission system equipment; failed to properly complete maintenance and repair work as scheduled; failed to assure critical spare parts and vendor supports were available; and worked maintenance on backup generators beyond the winter cutoff date.

The PUB has called on the utility to complete a specific list of maintenance work and equipment checks before the winter, to prevent a reoccurrence. The regulator is requiring regular updates.

While the provincial Liberals applauded the board's report, Dumaresque says it all falls short of what should have been done.

"There is absolutely not one consequence to all of these failures. All of the senior executives (at Nalcor) are getting tens of thousands in bonuses and not one has lost their jobs," he said.

He said the work of both Henderson and Nalcor president and CEO Ed Martin need to be put under review.

"Ed Martin - he has said the buck stops here and Ed Martin should be accountable," he said.

Martin's salary stands at $501,000. His performance bonus at the end of 2013 was $150,302.

That compensation is based on his role leading all of Nalcor's business arms.

Meanwhile, Dumaresque also said the provincial government has failed to date to take "real responsibility" for the power troubles and the PUB has refused to show its teeth.

He pointed to occasions wherein he believes the PUB could have been more forceful in how it dealt with Hydro.

One example was in relation to a recent application for the purchase and immediate installation of a 100-megawatt backup turbine generator at the Holyrood Thermal Generating Station. The proposal was given and swift approval, without the standard review.

Dumaresque has been on record objecting to the purchase as proposed.

The PUB has expressed concern the estimated $119-million unit might not be ready by Dec. 1 of this year. That is despite temporarily letting slide the question of how the unit will be paid for and all challenges for whether or not the unit identified is the right purchase.

Hydro says it is on schedule to have the generator ready for this winter.

In a statement issued shortly after the PUB's report, Hydro's Henderson said the utility is committed to taking all necessary actions to assure the blackouts experienced early in the year do not reoccur.

 

Organizations: Nalcor Energy, Board of Commissioners of Public Utilities, Martin's Holyrood Thermal Generating Station

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  • Maxwell J.
    May 21, 2014 - 21:44

    A new threat is eating away the governance structure of large organizations - accountability without consequence. Scholars documented its presence, for example, in the recent international meltdown of the financial sector. With damages in the U.S. alone approaching $13 trillion, there was an expectation that heads would roll. Not only did that not happen, large chunks of government bailout funds were bonuses out to those responsible for the catastrophe. The principle of accountability has taken a hit. It is now used to comfort shareholders with little if any evidence of it's practical application in corporate governance. In the wake these days of some horrendous management failure or other, we typically hear the phrase 'I take full responsibility for what has happened'. The statement has little if any meaning. Rarely is it followed by demotion or cut-in-pay let alone dismissal or resignation. The phenomena is especially pervasive in mega corporations and public enterprise. It is further proof (if any was needed) of the sharp divide between big organizations and small. As a senior executive in a small business, I could never expect to survive an error in judgement of the magnitude that shut down the province for days on end. Since then we have had the perfunctory acceptance of responsibility by key players. Despite the enormity of the consequences to ratepayers however, we have yet to see any consequences for those who accepted that responsibility.

  • W bagg
    May 21, 2014 - 13:51

    It is Hard to miss goals when you have a legal monopoly..............and they still couldn't meet the goals, hecne #darkNL

  • Cyril Rogers
    May 21, 2014 - 11:05

    Their inability to manage the assets of Hydro says a lot about somebody and I very much doubt it is the ordinary worker employed by Hydro. As I have asserted previously, the buck needs to stop with Ed Martin who likes to talk the talk but does not want to walk the walk. Actually, I would go so far as to say it goes all the way to Confederation Hill, given the way NALCOR and the PC administration are intertwined. The fact that Mr. Martin got a huge performance bonus last year…a bonus worth three time the average salary of many NL households….while purportedly managing a project whose costs continue to escalate, with no end in sight…..says a LOT more about the ineptitude and corruption at the top of the pyramid. The inability of NALCOR to manage the ever-changing rationale for MF is one thing….the unwillingness of the government to pull back from this project in the face of all kinds of evidence to the contrary….these are the kinds of sloppy, lazy thinking that permeate the political and corporate elite of NL. Unfortunately, incompetence rewards incompetence!!