It’s beyond comprehension. Thanks to his bonuses, Charles Émond, the CEO of the Caisse de dépôt et placement, won in 2021 the tidy sum of $ 6.3 million.
Hold on tight: Charles Émond has thus pocketed, on his own, more money than all of the 29 members of the Legault government’s Cabinet. Prime Minister François Legault and his 28 ministers shared total compensation of $5.3 million, or an average of $183,000 per ministerial head.
It has neither head nor tail. But what do you want, in the world of high finance, juicy performance bonuses, commonly called variable compensation, are commonplace. And at the Caisse de depot et placement, like the other large sovereign pension funds, we benefit greatly, very largely.
Competition obliges, it is alleged, that is what it takes to attract good portfolio managers.
To paraphrase the slogan of the Hygrade sausage: in the world of high finance, the higher the premiums, the more you want, the more you want, the higher the premiums.
But big bonuses are absolutely no guarantee of big returns, let’s take it for granted.
As my colleague Sylvain Larocque reported last week, in 2021 the Caisse paid its employees performance bonuses for a total value of some $188 million.
CEO Charles Émond and his five senior management colleagues have shared a lavish $12.1 million prize pool in performance bonuses in 2021.
For his part, Émond received a hefty performance bonus of $3.8 million, or 38% more than his 2020 bonus. This bonus takes up 84% of his overall compensation, which in 2021 reached an amount of 4, $5 million. That’s not all…
In addition to his annual compensation of several million dollars, Mr. Émond had negotiated a jackpot of “compensatory amounts” when he was hired, in February 2019, as “Senior Vice-President, Quebec, Private Equity and Planning strategy” of the Caisse.
Indeed, leaving his former position as v.-p. Scotiabank to come and work at the Caisse, Charles Émond ensured that the Caisse’s Board of Directors granted him a special jackpot of $3,964,000 as “compensatory amounts for his hiring”, including $713,000 in 2019, $1,482,000 in 2020 and $1,769,000 in 2021.
So, concretely, for the year 2021, CEO Émond thus benefited from a total compensation of 6.27 million dollars.
Then follow the first five vice-presidents:
- Emmanuel Jaclot, Infrastructure: $3.07 million
- Martin Laguerre, Private Placements: $2.7M
- Vincent Delisle, Liquid Markets: $2.23M
- Marc-André Blanchard, Worldwide: $2.13 million
- Kim Tomassin, Quebec: $1.88 million
PERFORMANCE
To what factor is attributed the very large increase (+26.6%) in the compensation of senior management at the Caisse in 2021? The impact of the Caisse’s good performance on the calculation of performance bonuses offered to officers.
In 2021, the Caisse reported a return of 13.5%, its best return since 2010.
But beware, this return of 13.5% is still slightly lower than the median return of managers of diversified pension fund portfolios. According to the LifeWorks Group Pension Fund Managers’ Mutual Fund Performance Universe study, the median for diversified funds is 13.83% in 2021.
You should also know that in 2021, a “small” investor could beat the Caisse with a return of 14% by investing his assets in only three index funds, i.e. 35% in bonds (FTSE Canada universe index), 32.5 % in Canadian equities (S&P/TSX index) and 32.5% in global equities (MSCI world index).
QUEBEC IS LOSING FEATHERS
Since the arrival of Charles Émond at the Caisse in early 2019, the assets of the investments that the Caisse has made in Quebec have increased by $14.2 billion, from $63.8 billion (2018) to $78 billion. in 2021.
At first glance, this may seem extraordinary. Sorry, but that’s absolutely not the case. The “Quebec” assets within the Caisse are growing much more slowly than the Caisse’s total assets, which have reached $419.8 billion.
While the “Quebec” assets in the Caisse’s portfolio increased by 22%, the Caisse’s total assets recorded growth of 35.6%.
At the end of 2021, “Quebec” assets accounted for 18.6% of the Caisse’s total assets. In 2018, the year before Mr. Émond was hired as Senior Vice-President, Quebec and Private Equity, “Quebec” assets represented 20.6% of the total assets of the Caisse de dépôt!
The weight of Québec in the total assets of the Caisse’s portfolio thus lost two percentage points under Charles Émond’s senior management.