A Vancouver Sun article recently offered a few outdated items about salaries paid to executives of the British Columbia Investment Management Corportion (BCimc). It was a public relations piece devoid of detail, dictated to a Postmedia stenographer. That was followed with a letter to the editor from a pension investment industry insider, not identified as such by the Sun, who gave unreserved applause to BCimc managers.
A source tells me that senior investment executives in Victoria again enjoyed large wage increases in the fiscal year now ending so they’re trying to spin news that BC’s highest paid civil servants are in fact underpaid.
If we had an energetic and inquiring corporate press, citizens would have much more knowledge about workings of the group that manages British Columbia pension funds. Regular readers won’t be surprised that I write again about BCimc and that my work isn’t aimed at giving comfort and support to Doug Pearce and colleagues.
As with ferries, neighbors offer a reasonable comparator for the evaluation of a public BC organization. Washington State Investment Board (WSIB) manages a fund of $90 billion while BCimc has $100 billion in its coffers. The Americans run a very tight ship and have dispensed with fancy offices and even fancier remuneration and expense packages. The top five WSIB executives earn less than a quarter of BCimc’s top five. If I could show you details of the top 20 at each shop, the fraction would be even lower.
Other than leading the world in bitumen and beaver pelts, Canada appears to lead the way in salaries paid to public sector mandarins. The BBC offers a full list of the UK’s top-paid civil servants. According to The Telegraph newspaper, last year’s highest paid public official in Britain was Ian Nolan, an investment manager who earned £330,000 a year, about one third of Doug Pearce’s total remuneration.
Clearly, the BC government has no risk of losing senior officials to European or American recruiters.
Part of the BC Liberal spin is that wise heads in Victoria are doing such an extraordinary job, adding value over and above targeted amounts. (Moving targets, as usual.) Truth is that in three years ended March 31, 2013, BCimc averaged 9.5% per annum. Not bad, but our friends at WSIB earned 12.7 p.a. in the three years ended June 30 2013.
Had BCimc earned that higher rate of return, funds income over three years would have been $10 billion higher. You won’t be reading that at a Postmedia newspaper. Nor will you read that directors of the BC organization, unlike Washington counterparts, are paid handsomely for quiet attendance at a handful of meetings each year.
Another worry is that a cash rich company with ineffective oversight and almost no transparency or public accountability is ripe picking for unscrupulous villains. Rogues often work in gangs. There’s a horde of high paid officers at BCimc – twelve vice-presidents plus a chief operating officer and a chief executive officer. WSIB’s top officials are an executive director and a chief investment officer. Even their chief financial officer rates a salary under $200,000.
|Restraint in the Land of Not-Net-Zero|
Note: In 2007 and 2008, CEO Doug Pearce had average earnings of $662,775. In 2012 and 2013, Pearce averaged $1,421,535.
In 2007 and 2008, VP Lincoln Webb had average earnings of $283,764. In 2012 and 2013, Webb averaged $941,354.
In 2007 and 2008, British Columbia Investment Management Corporation averaged earnings of 11.85%. In 2012 and 2013, BCimc averaged 7.7%
The sign on the boardroom door should read,
“Heads we win. Tails you lose.”
Categories: BC Investment