June 30, 2022

The tenure of Doug Suttles as chief government officer of the Firm Previously Referred to as Encana might be summed up in some ways, however I recommend two numbers.

Minus 58 per cent. That was the share-price return for Encana – now often called Ovintiv Inc. – over his eight-plus years within the CEO’s chair.

And US$104-million. That was the quantity the corporate paid him to guide it southward, each in worth and, from Calgary, to its new headquarters within the metropolis of Denver.

It is probably not probably the most colossal mismatch between government compensation and firm efficiency in Canadian historical past, however it’s a contender. And probably the most wonderful factor is that the design of the corporate’s pay plans means Mr. Suttles, now 61, could finally make much more cash from Ovintiv as he settles into his retirement years, elevating cattle in rural Colorado.

Mr. Suttles left the corporate final July, however Ovintiv’s just lately filed proxy round offers us a few of the last pay particulars that permit us to make this troublesome tally. (Encana was renamed Ovintiv in January, 2020.) Instructed that this column would assessment Mr. Suttles’s compensation over his tenure and observe the corporate’s inventory efficiency, Ovintiv spokesperson Patricia Posadowski thanked The Globe and Mail for the chance to reply, however stated “we won’t be offering commentary on this story.”

A assessment of the Encana/Ovintiv proxies masking 2013 via 2021 reveals complete compensation for Mr. Suttles of US$104.4-million, a mean of simply over US$13-million a 12 months. Over that interval, he made US$8.5-million in wage and US$15.7-million in money bonuses. The majority of his pay was stock-based awards valued at US$59.8-million and inventory choices valued at a hair beneath US$17-million. (The remainder, about US$3.4-million, falls beneath “different compensation.”)

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That features 2021 pay of US$12.13-million, together with a long-term inventory award valued at US$9.5-million, for his seven months of service till retirement.

However wait, you say – given the steep drop in Encana shares over time, didn’t these years of inventory awards transform value a lot, a lot much less? , at-risk compensation, pay for efficiency, all that?

Really, no.

Actually, a few of the awards labored as you may anticipate. A assessment of insider-sales information filed with regulators reveals that from 2017 to 2019, a whole lot of 1000’s of Mr. Suttles’s Encana choices expired unused. Choices will let you purchase a share of inventory at a set worth, so if the share worth goes up on the open market, they are often extremely worthwhile. If the inventory worth falls, as Encana’s did, the choices haven’t any worth as soon as they expire.

As well as, the primary performance-share award Encana gave Mr. Suttles expired in 2016 with zero payout, a very uncommon occasion in Canadian compensation. Corporations normally discover a approach to throw some worthwhile crumbs at executives, no matter efficiency.

That meant some inventory awards Encana initially valued at thousands and thousands of {dollars} finally paid zero. Nonetheless, a few of Mr. Suttles’s awards have already paid greater than Encana’s first valuation.

Encana’s performance-share inventory plan took a multiyear measure of the corporate’s outcomes after which allowed for a payout of greater than 100 per cent of the unique award. In 2018, Mr. Suttles received 121 per cent of what was initially awarded. In 2019, it was 168 per cent – and he acquired a payout value practically US$12-million.

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A assessment of Mr. Suttles’s share-based compensation reveals that he has acquired money funds of US$31.3-million, and the remaining inventory awards he held at his departure could be value greater than US$67-million at present costs. Mixed, that’s practically US$100-million all by itself – lots increased than the unique estimated values of US$59.8-million.

Inventory-transaction information present that his previous inventory choice income, plus unexercised choices he held at his departure, mix to be value greater than US$16-million – not an entire lot lower than their authentic estimates. And so they can improve in worth from right here.

We don’t know whether or not Mr. Suttles exercised choices or offered inventory after his departure, however we all know he can – Ovintiv says that an government who retires at age 60 or older can retain his inventory awards and permit them to vest over their authentic schedule. So the share awards and choices could improve in worth if Ovintiv’s share worth rises. That would carry Mr. Suttles’s complete to US$140-million or extra.

No matter Ovintiv inventory returns from right here, nonetheless, is probably not sufficient to undo the injury of the place it’s been. In accordance with a search carried out with S&P International Market Intelligence, there are 11 Toronto Inventory Change-listed vitality corporations presently value at the least $10-billion that traded over the eight years of Mr. Suttles’s tenure. At destructive 58.8 per cent, Ovintiv edges out Cenovus Vitality Inc. for worst efficiency. Seven of the 11 posted constructive positive factors, and three – Pembina Pipeline Corp., TC Vitality Corp. and Canadian Pure Sources Ltd. – returned greater than 90 per cent.

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Actually, then, there are various numbers to look at on the subject of Encana within the Suttles years. So many, many zeroes – an outline each of Mr. Suttles’s paycheques, and of the board of administrators that signed them.

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