A bunch of years ago, I was a VP of a high tech company in Montreal. We had a banner year the second year that I was there based on major deals in the UK and California. (I have to admit here that I was not being a true Canadian, according to Harpo, since for almost two years I lived in both the UK and the US doing these deals.) The management team was awarded pretty fair bonuses based on the year's accomplishments. The next year was bit leaner. We still made a profit but, since no new major deals were announced of the size the year before, the bonuses were skinnier. In the third year there was chaos in the market and sales dropped off dramatically (by this time I was VP Strategic Planning and focused on product strategy for the future). There were no bonuses in year three. By year four things had turned around a bit and we began getting new significant business . Bonuses resumed based on results.
Why am I telling you this? Because the ideas of risk reward have been thrown out the corporate window in favour of nest-feathering by executives.
Read today's Ottawa Citizen on the situation at CPP where they lost over $23,000,000,000 in the past year. But according to FinMin Flaherty in an interview, since CPP has a good track record over time (read that, when things are going well), the CPP executives deserve their bonuses.
Got two questions for Flaherty and CPP. One, where is the incentive for CPP executives to do better when they are rewarded for losing big time? And second, where was Flaherty when my bonuses disappeared those many years ago?
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