Investment Quebec | A loss of 234 million and a return of -4.8%

Despite a year where risk-taking was higher and which resulted in a loss of 224 million, half of the highest paid executives at Investissement Québec (IQ) earn more than a million dollars. Performance is not measured by performance, retorts the president and CEO of the state corporation, Guy LeBlanc.

The financial arm of the Quebec state has not been spared by the volatility and deterioration of economic conditions. An increase in provisions for losses – $130 million was set aside – and a decline in the value of investments caused the Crown corporation to post a negative return of 4.8% at the end of the period. fiscal year ended March 31.

“We don’t measure IQ’s performance by its performance,” said Mr. LeBlanc on Tuesday by videoconference. Unlike other investment funds, we measure our performance essentially by the role we play in the economy and with companies. »

The state-owned company mainly insisted on the theoretical aspect of the loss of 224 million. This is not the “definitive performance of the value of the investments”, argued its leaders. They also emphasized the return spread over five years, which reached 6.3%. This exceeds the average cost of equity which is equivalent to the government’s borrowing rate (2.1%), noted Mr. LeBlanc.

During the 2022-2023 fiscal year, IQ carried out 1,293 financial interventions, or 189 fewer than the previous year. They total a value of 1.9 billion, down from the 2 billion recorded in 2021-2022.

“We had to be more proactive in the market,” explains Mr. LeBlanc. With the context, companies had to postpone their projects. We had to work twice as hard to convince them to invest because some companies were not investing. »

Speculative

IQ also takes more risks when it comes to lending money. About 58% of the loan portfolio was of “medium or low quality” last year, compared to 46% in 2021-2022. These are investments qualified as speculative – credit rating ranging from B+ to CCC+ – by major rating agencies such as Standard and Poor’s.

Asked, the big boss of IQ replied that 93% of the interventions of the organization are carried out with companies which have less than 200 employees, adding that these were not as highly rated compared to large companies. .

“Company size is a factor,” says LeBlanc. That doesn’t mean it’s not [le prêt] quality. »

A professor of accounting sciences at UQAM and a specialist in governance, Saidatou Dicko partially agrees with the argument that IQ’s performance goes beyond the boundaries of its performance. Without going into the aspect of compensation, she emphasizes that the mandate consists of “taking risks” with companies that have not yet reached their “profitability phase”.

“This could lead to slightly more risky investments and necessarily a higher level of losses than in previous years in a more unstable economic context,” she underlines.

New prime

The last fiscal year also marks a turning point in terms of compensation at IQ with the payment of long-term bonuses, which stem from results recorded since 2019-2020. This resulted in three of the highest-paid executives earning a total pay – which takes into account base salary, bonuses and other benefits – in excess of 1 million.

Combined, the six main bosses were entitled to a salary of 5.9 million, up 23% from the 2021-2022 financial year. Mr. LeBlanc got 1.06 million. How can these emoluments be justified in light of the results of the past year? Mr. LeBlanc turned to the organization’s 2020-2023 strategic plan.

“Of 18 performance indicators, 12 were met or exceeded,” he said. The targets we have missed are usually by a small gap. »

IQ’s strategic plan, however, casts a much wider net than financial performance. For example, it identifies objectives in terms of the number of projects financed concerning productivity and sales generated internationally by companies supported by IQ.

Sign that the theme of compensation is delicate, IQ had held a technical briefing session on the issue before revealing its results. Based on financial performance, annual bonuses will total less than the $860,000 paid last year. According to Marie Zakïb, Senior Vice-President, Human Resources and Internal Communications, the amount could be cut by 50%.