Bonuses calculated during non-working years at the Caisse de dépôt

There is my journey. Caisse Dépôt et Placement du Québec (CDPQ) paid bonuses to its senior executives for years of service when they were not employed by it.

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Let me explain. Juicy bonuses paid annually to senior executives of the Caisse de dépôt et placement are determined in particular by the overall performance achieved by the Caisse over the past five years.

Thus, the calculation of the amount of attractive bonuses paid as “variable compensation” in 2022 took into account, among other things, the overall performance of the Caisse over the 5-year cycle from 2018 to 2022 and the added value compared to benchmarks.

What is the problem? Of the six senior executives who will share $11 million in bonuses in 2022, four of them, including CEO Charles Emond, have worked at Caisse less than five years.

The Caisse’s board of directors pays its senior officers bonuses that take into account the Caisse’s previous performance while they were in office. But it is irresponsible to give bonuses for entire performance years when they are not employed.

By the way, in the calculation of the so-called “variable compensation”, say bonuses, there are three parts: the total return in 5 years; sector-wise returns over 5 years; and personal contribution.

And what proportion do each of the components play in variable compensation?

“A higher hierarchical level, more weight on the overall performance in proportion to the sector component to promote accountability and alignment of interests within the institution to meet the needs of our depositors,” said Caisse spokesman Maxime Chagnon, head of global media relations.

Emand’s case

Let’s peel back the case of Charles Emond. He joined La Caisse in February 2019 as senior vice president in Quebec. He will take over from Michael Sabia as CEO on February 1, 2020.

Since Charles Emond was at Caisse, he received about $12.3 million in bonuses. Here are the details of each year of his service. And between parentheses, I give the number of years he was employed by the Caisse in the 5-year cycle of total performance covered by the bonuses he received.

• $2.2 million in 2019 (1 year of employment from 2015 to 2019);
• $2.75 million in 2020 (2 years of employment from 2016 to 2020);
• $3.8 million in 2021 (3 years of employment from 2017 to 2021);
• $3.58 million in 2022 (4 years of employment from 2018 to 2022).

As you can see, during his four years of service at Caisse, Mr. Emond always benefited from large bonuses, some of which depended on the previous performance reported by his predecessor, Michael Sabia.

The other three were lucky

Vincent Delisle, Senior Vice-President and Head of Liquid Markets, was appointed in August 2020. The total bonuses granted to him by Caisse were $3.75 million, namely:

• $598,000 in 2020
• $1.65 million in 2021
• $1.5 million in 2022

Marc-Andre Blanchard, “Senior Vice President and Head, CDPQ Global and Global Head of Sustainable Investment,” who arrived in September 2020, received bonuses of $3.39 million, including:

• $500,000 in 2020
• $1,495,000 in 2021
• $1,395,000 in 2022

For his part, Martin Laguerre, senior vice president and head of private equity, worked for Caisse de dépôt et placement for 1 year and 10 months. This allowed him to collect US$2.14 million in bonuses, including US$904,192 for 10 months in 2022 and US$1,234,800 in 2021.

It is still surprising to learn that the bulk of the bonuses pocketed by these three colleagues of Charles Emond depended on years of overall performance (calculated on a 5-year cycle) where they did not use the fund.

I like to believe that you have to compete to attract good portfolio managers. But from there to paying bonuses for years when they are not in office, a damn limit should not be crossed!