Reboot Alberta

Tuesday, June 03, 2008

Alberta Venture and the Ethics of Executive Pay.

The June issue of Alberta Venture magazine is out. The "The Right Call" business ethics column this month is on executive pay. The panel this week is me from Cambridge Strategies Inc., Janet Keeping from the Sheldon Chumir Foundation and Harold Milavsky of Quantico Capital Corporation. Fil Fraser moderates once again.


We can look at this in terms of pay for politicians now too with the hefty raises recently passed in the Alberta Legislature. Here is a link to my earlier blog post on that issue.


Give the column a read and let me know your thoughts.

8 comments:

  1. Anonymous7:12 pm

    I agree with you that the wages should be increased. However, they are dead wrong on how the implemented it - they should have hired an independent valuator (such as an accounting firm like Pricewaterhousecoopers) to determine what the increases (similar to approaches in BC and Ontario). Instead, they did it in behind closed doors - that is the old liberal approach that should not be used by any party that is conservative.

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  2. Evry time they do that they get dumped on too. The MLA deal was they got the average of the wage settlement of all employees in Alberta. The base is perhaps low but the model was good politics.

    I don't think the pay raise is enough to bring good people into public life either. It is a very hard and thankless and risky business - politics.

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  3. Anonymous7:32 am

    Paying politicians well does not get quailified or quality candidates. What we get is inexperienced people. Let me give you a few examples. Rob Renner , the florist, in charge of insurance/tort reform (ha ha). Mike Cardinal implementing insurance deregulation (a total disaster. I could go on provincially. The same happens federally. We get Rahim JAffer with no expereince in the real world. Or JAmes RAjotte (Industry chair in the Hosuse of Commons and he has no training or work experience in industry....amazingly bizzarre. Kinda like having the safeway checkout clerk perform surgery).

    The two most glaring examples are HArper (with no private sector expereience) and Klein (who utterly lacked training, education and expereinec in anything).

    The sad fact is that many MLAs and MPs do not qulaify for entry level jobs in government and yet they sit at the top of the org chart.

    Big bucks for these bozos is not the answer.

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  4. Good morning Anon @ 7:32. I understand your frustration. However, I don't think we elect subject matter experts in a representative democracy. We ought to be electing people with life experiences and strong values and proven qualities of character with a grounded and confident sense of self.

    Government can buy the subject-matter expertise it needs. We can't buy values, character, insight, wisdom, a sense of community and empathy. Those attributes are taught in families and communities and in schools and workplaces and throughout our society in general. Those are the criteria I think we ought to base our evaluation of a politician at the voting booth.

    The comment you make about Renner and Cardinal are not related to those qualities of character I spoke about. I think your criteria look at politicians as industrial workers and not policy makers who we select in election to make choices for the rest of us. The small business - small city background of Rob Renner has served him - and us well. The aboriginal and small business background of Mike Cardinal has served him and us well too.

    That said, we have much larger concerns about how we are governed. The quality of the character and the personal value set of our elected representatives are what really influence how and what they decide is important and what they decide ought to be done. These are much more important to the future of our society, our environment and our economy.

    I would ask you to go a bit deeper in your evaluation of our political system and our politicians and what you expect of both. I think we would agree we need to expect much more than we do now. I would measure the success of the system a bit differently than you I expect.

    Thanks for the comment.

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  5. Anonymous9:50 am

    I think what is important to realize with all of this is that if they don't do the committee work they don't get paid, at least with the backbenchers anyway. So while they bbs could go up really high, they could make also make zilch if they don't do any work. Same probably goes for Cabinet. If they don't do the work, they won't get the pay. At least that is what it looks like to me.

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  6. Anonymous2:21 pm

    Would be interesting to know "anonymous 7:32 am"'s qualifications for whatever it is he/she does.

    Kirk Kerkorian is worth billions and is an 8th grade dropout. Long Term Capital Management, a hedge fund whose downfall nearly precipitated a financial meltdown several years ago, was staffed by PhD's, including two Nobel prize winners.

    Interesting article, Ken. What Milavsky doesn't get/acknowledge is that compensation consultants make their living telling boards of directors what the "average" compensation is for management in an industry, and based upon that, advising on compensation for an above-average management team (as everyone believes they themselves constitute). Hence the obscene executive level compensation rampant in the private sector.

    I think the recent minister raise was handled poorly from a communications perspective, but when you consider that the presidents of the two major Alberta universities each make more than double the Premier and triple the ministers (without even including their pension benefits), the pay is still pretty low. Especially given the workload, and given the fact that you need to re-interview for the job every four years.

    Some back of the envelope math would suggest ministers now get paid about $40/hr, which is probably overstating the "wage", since I assumed 6 12-hr days a week, and overtime (time and a half) after 37.5 hrs a week. Based on my limited viewpoint into the workings of gov't, I could be under-estimating the hours worked.

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  7. Anonymous3:52 pm

    Well we know what leadership has done for us in laberta. Hyperion Energy announced a $10 billion refinery to process ALBERTA bitumen. What the hell? When will these damn premiers (both Klein and Stelmach) stop shipping the high paying jobs down south. I am livid with the loss of opportunity for our province.

    Raising the MLAs pay has not prevented this catastrophe. And Stelmach has shown himself to be less than honourable when he said this was like selling topsoil and it wouldn't happen on his watch.

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  8. Anonymous4:40 pm

    So what do you suggest? Putting an absolute ban on sending any unrefined bitumen across the border? And what border... Canada/U.S. or Alberta/Saskatchewan?

    Command and control type policies like that are nothing but central planning in disguise. I'm fine with providing some incentive, but you just can't order the border closed. It is a free market.

    Fact is, we (Alberta, that is) already upgrades a majority of bitumen that is currently being produced. Upgraders are in the works to process more. You will never get 100% processed locally. Nor would you want to. A closed market would drive down the domestic oil price since there would be no transparent market mechanism to price it. It would also dramatically raise construction costs here (even more). Think of the impact that would have on royalty revenues or the investment environment here long term.

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