Thursday, March 27, 2014

Not a puffball comparison

A Vancouver Sun article recently offered a few outdated items about salaries paid to executives of the British Columbia Investment Management Corportion (BCimc).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."

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22 comments:

  1. As events over the past couple of weeks unfold it becomes very clear that BC taxpayers are no more than ATMs. We fund so much non government expense why would we worry about paying to much for legitimate costs.
    13

    ReplyDelete
  2. BCIMC inventory here:

    https://bcimc.com/publications/pdf/Inventory/Inventory20130331.pdf

    ReplyDelete
  3. Hugh;
    Thanks for that link. Very interesting.
    3 things struck me:
    The first nine words; “In keeping with our values of openness and integrity,” cause nausea.
    The lack of investment in BC, the best place on earth, versus other jurisdictions.
    Many of the companies on the equity list remind me of the shells involved in the Eron Mortgage fraud of the late nineties involving 220 million dollars.

    Hawgwash

    ReplyDelete
  4. does anyone think it would be any different if the NDP had won government? Would all of these excessive salaries disappear within 6 months?

    Why was this not a contentious issue during the provincial election? Did Norm bring these things to the attention of the NDP candidate in his riding? Is this going to brought forward during the Leadership contenders visits?

    Seems to be more additions to a whine collection

    ReplyDelete
    Replies
    1. Is this the best output of the Liberal media machine?

      Delete
    2. New batch of PABer's?....or maybe still the old batch, which would be yet another example of those who are not able to perform at a level indicative of their pay grade! I see poor retention of conclusions from previous threads (that these articles are not about left or right issues based on emotions, but right or wrong issues based on facts). I see lack of understanding that the reason things are still not a contentious issue is due to Herculean efforts by said Liberal media machine to keep things under wraps (with facts often only accessible by FOI requests). Whining? I think not. Angry enough to become involved, write letters, go to meetings, raise awarness amongst one’s peers?….you bet. It is heartening that commenters like this are urging more of an official opposition presence in the calling out of such fiscal mismanagement. I do not think they will be disappointed.

      Delete
  5. As egregious as the BC Ferries compensation packages. Let's get BC Ferries back from the quasi-private company status so government is again accountable. And BCMIC executive salaries should be reined in and raises tied to inflation and cost of living -- a compensation plan most working folks in BC deserve, but have not realized under Campbell 'n' Clark.

    P.S. So much of it hitting the fan of late and AGT's blunt, barefisted, unabashed and unfettered dispatches are sorely missed.

    ReplyDelete
    Replies
    1. The mighty political columnist Michael Smyth, on CKNW today was ranting about Jingle Bell Rock and feral pussies.

      Delete
    2. now here is an example of exceeding the performance expected of one's pay grade...the Liberal media machine is getting good value....not a hint of contentious issues ....just think of all the time saved by not presenting both sides of a story when there is no story!

      Delete
  6. Norm - So glad to see you are back! Thanks for all your hard work.

    ReplyDelete
  7. Q: How many companies in the BCIMC portfolio are part of the military industry?

    Also on the list: Monsanto, Goldman Sachs, Halliburton...

    ReplyDelete
  8. That Vancouver Sun article mentioned must be 'The half-million dollar club - the public sector's highest-paid list" The Sun even got the title wrong, should have been the million-dollar club.

    ReplyDelete
  9. They make no real pretense of ethical investing or of preferring investments in British Columbia to anywhere else in the world.

    I have an underlying concern that BCimc's denial of need for ethics in placing an investments is a warning that other sorts of improper actions might be tolerated. Like kickbacks and promotion of personal interests.

    The old bank robber was asked why he robbed banks and the alleged response was, "Because that's where the money is."

    So, pension management operations, with tens of billions at hand, are desirable targets for crooks, bandits and people soft on ethics. How are these people helped? By having near-zero transparency in the funds management.

    ReplyDelete
    Replies
    1. "So, pension management operations, with tens of billions at hand, are desirable targets for crooks, bandits and people soft on ethics."

      BINGO!!!

      I know of just that scenario, in commercial real estate ownership, where the funds came from major corporate pensions.
      Shell companies and cozy contractor connections, just like the Portland Hotel Society, syphoned off millions.

      When it was discovered, it was handled internally so as not to chase away the pension funds.

      Delete
    2. Proving that honesty and ethical behaviours are not matter of left and right. Shall I say the obvious? It's a matter of right or wrong.

      Delete
  10. Washington State publishes all salaries paid to employees.

    http://fiscal.wa.gov/Salaries.aspx

    WSIB can be examined by checking "State Investment Board."

    ReplyDelete
  11. You should emphasize the returns at WSIB in the last three years were 1/3 better than returns earned by BCIMC. Doesn't Washington State know they should be paying their top people three or four times more.

    Reminds me of the ferry situation when BC Ferries was paying David Hahn more than a million five and Washington was paying their top ferry guy about $140 K.

    ReplyDelete
  12. Another great piece of work Norm, thanks, and BTW what's the latest on Sino-Forest? Last I heard RCMP and IDA types were still digging. Did Pearce and pals find that gem themselves or did elGordo push them into it? And BTW isn't Pearce due to leave soon? No connection of course to a little land feud in Ucluelet-Tofino area....

    ReplyDelete
  13. Great story Norm! But why do you do it? Don't you know all this info just pisses me off? Do you care?
    I, like all your commentators, seem powerless to do anything about it. Yes, I voted last time, and ten times before. Not for the Lieberals this time though. We all high-five you, and whine. I do one better! I sulk, castigate, swear, threaten to with-hold my taxes. But do nothing.
    I'm almost eighty years old and am (almost) prepared to shed blood in order to protect and/or provide for my offspring.
    I'm on the verge of giving up... reading your blog, in order to keep my blood pressure down. I've managed to get by without AGT and I could maybe get by without you. But I won't.

    ReplyDelete
    Replies
    1. Thanks for the kind words. Don't give up on AGT. He may be back before too long.

      BTW, nil carborundum illegitimi. Or, don't let the bastards grind you down. As Kris Kristofferson sang,

      And I've just got to wonder what my Daddy would've done
      If he'd seen the way they turned his dream around
      I've got to go by what he told me, try to tell the truth
      And stand your ground
      DON'T LET THE BASTARDS GET YOU DOWN

      Delete
    2. So many of those old lyrics were so poignant and foretelling of THE BASTARDS.
      It will be interesting to see the "new" AGT if he does return.

      Delete

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