MONTREAL - Michael Sabia received a $21-million golden handshake from BCE Inc. (TSX:BCE) when he departed the top job at the telecom company last summer, before accepting his controversial appointment as head of Quebec's pension fund manager.
The package from Canada's largest telecommunication company included severance equal to three years' salary and short-term incentives exceeding $9 million, according to BCE's proxy circular.
The former chief executive also received $1.25 million related to BCE's abandoned privatization attempt, $3.1 million incentive pay, $2.9 million in accelerated vesting of stock options and $729,000 in salary until his departure July 11.
Since turning 55 in September, Sabia began to receive an annual pension of nearly $969,000. The pension represents 40 per cent of his best consecutive 60 months of earnings and may increase by up to four per cent annually. The total value of his accrued pension obligations is $14.9 million.
Sabia has attempted to quell concern about his recent appointment as president and chief executive of the Caisse de depot et placement du Quebec by offering not to accept a bonus for two years, a $235,000 annual pension and another departure payment.
Caisse chairman Robert Tessier had called Sabia's decision to forego some payments as "altruistic" and "generous."
Telecom analyst Carmi Levy of AR Communications said Sabia's package, like that of former General Motors boss Rick Wagoner, demonstrates a disconnect between pay and performance.
"There doesn't seem to be a correlation between what you get in severance and the success at which you performed your job," said Levy, who said Sabia's tenure won't go down as Bell's finest hour.
BCE chief executive George Cope earned $4.6 million last year. He replaced Sabia as the Ontario Teachers' Pension Plan and its partners attempted to close the $52-billion transaction, which ultimately fell apart later in the year.
Included in Cope's payment was a $2-million recognition and retention payment related to the privatization effort and a $1.2-million incentive payment. His base salary was $959,000. That amount increased to $1.25 million as of Dec. 31.
Cope stands to receive $15 million in shares to be vested by the end of 2010.
In the filing, BCE said the Teachers' deal increased the work load of senior executive without giving them an opportunity to renegotiate higher remuneration. Last year's payments were "exceptional and non-recurring," it added.
Since his appointment, Cope has shed thousands of employees by removing layers of management and funded the development of updated wireless technology.
Other senior executives received compensation ranging between $4 million and $5.3 million besides stock options.
Levy said these amounts are the going rates for those charged with "turning around a Titanic-class company."
Board member Donna Kaufman, who headed the strategic oversight committee that reviewed the takeover offer, earned $300,000 on top of the base $150,000 annual fee.
Meanwhile, board member Jim Pattison plans not to seek re-appointment to the board at BCE's May annual meeting. New nominees for the board include CAE Inc. (TSX:CAE) president Robert Brown, along with Barry Allen and Paul Weiss.
Several proposals will be voted on at the Toronto annual meeting, including one giving shareholders say on executive pay. The board is recommending approval.
But they want shareholders to reject efforts to provide a special dividend for the payments missed in July and October when BCE was trying to ensure the deal closed.
BCE shares closed up 89 cents to $26.01 Wednesday on the Toronto Stock Exchange, up 3.5 per cent .