Nalcor execs paid up to $270K more than government peers, given more perks: report

Management and executive employees at the Crown corporation responsible for Muskrat Falls were — and continue to be — paid thousands more than equivalent government employees, according to the second half of a report by Newfoundland and Labrador's auditor general.

Executives at Nalcor were paid as much as $271,327 more than equivalent government executives at the top of their pay scale, while managers were paid as much as $116,782 more than equivalent government managers, according to the report, released Wednesday.

"We could not determine any business reason for this variance," reads the report, which covers the period from 2013 to 2018.

According to the report, Nalcor executive and management positions had the same accountability, problem-solving and know-how ratings of equivalent government positions, but the corporation's employees were paid more.

"I am disappointed to see that two positions that are equal — independently assessed as being equal — are paid significantly differently," Auditor General Denise Hanrahan said Wednesday, speaking to reporters.

Between 2013 and 2018, Nalcor's board of directors allowed executives to exceed the top of their pay scale by more than 20 per cent and approved a management salary structure with fewer classifications and broader pay ranges, allowing employees to exceed base salaries by more than 10 per cent.

"For context, these changes happened when provincial government employees were under a pay freeze," notes the report.

In 2018 — a year described by then finance minister Tom Osborne as a "tough phase" for the province's wallet — Nalcor sent $180.5 million on employee compensation, including $90.9 million for 950 management employees, $84.8 million for bargaining unit employees and $4.8 million for 17 executives.

All 35 positions examined in the report were paid significantly more than government counterparts, Hanrahan said. According to the report, the audit included input from a job evaluation consultant who verified that Nalcor and the provincial government used the same job evaluation criteria.

Crown corporations are usually required to pay employees according to position classification and government compensation policies, but Nalcor was exempted from the rule by a government order in council.

"We would expect them to use that exemption prudently, when there was an obvious business need," she said.

In 2018, compensation was 63 per cent of Nalcor's annual operating costs.

According to the report, each from 2013 to 2018, 15 executive employees were each given an average of $46,000 incentive payments, while 70 senior managers were given an average of $16,000 in lieu of bonuses. Senior managers at the top of their pay scale were paid about $1.5 million in bonuses.

Nalcor executives and management received a more lucrative bonus package than equivalent government employees, including up to 108 days of paid leave and a $12,740 vehicle allowance for executives.