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$7M bonus as CPP loses $24B

Um, I think you missed the point. The issue is whey did they get any bonus when the fund lost money.
 
The bonuses paid out to top execs in the business world is so crazy these days. I used to work at a company where the CEO got paid a $7 million dollar bonus when the company went under bankruptcy protection. How does someone get paid a fat bonus to bankrupt the company? What does he get paid when the company does well? Hundreds lost their jobs (including myself) while he collects a multi million dollar bonus. This should be f*cking criminal IMHO.

Another example is Nortel. Years ago, the CEO (can't remember his name) collected a $250 million dollar payout while the company's stock tanked! Nothing happened to him because of this, and he retired to a giant mansion north of Toronto. I'm sure he has homes in other more exotic places now! lol

It is so far out of whack these days compared to the rest of us working schmucks and it needs to be reined in asap!

The time is getting ripe for a good old fashioned revolution! ;)
 
IMHO it does seem ludicrous to pay these guys bonuses for losing 18.6% last year:confused: ?

However they probably justify their bonuses by claiming that they outperformed the major market indexes (xiu, xic, xsp, xin) last year which IMHO is a very weak argument.

IMHO the CPP is invested too much in equities. Maybe the CPP should readjust their asset allocation strategy going forward so these big yearly losses won't happen again?
 
at the end of the day, they get a percentage of the money they manage. our governments, investment firms pay them like that in order to obtain and retain good talent. though it seems retarded to make that kind of money when the fund tanks, but that's just the way it is.

for example..on a smaller scale...the owner of a mcdonalds that lost money this year goes to their store manager and tells him to return his salary cause the store lost money...which obviously doesnt make sense.

the situation is...a market at the top of the food chain was created and these types of people get these kind of guarentee in their contract. if they dont, they walk...because there is only a handfull of people who can really do their job.

another example...its like telling all the player on the phoenix coyotes to return their salary cause the team sucked and the team lost money...and now are in bankruptcy protection. do you think professional hockey players should get paid millions if they dont produce and the team tanks and loses money?

sux for us...great for them...but that's life.
 
soulsphere said:
at the end of the day, they get a percentage of the money they manage. our governments, investment firms pay them like that in order to obtain and retain good talent. though it seems retarded to make that kind of money when the fund tanks, but that's just the way it is.

for example..on a smaller scale...the owner of a mcdonalds that lost money this year goes to their store manager and tells him to return his salary cause the store lost money...which obviously doesnt make sense.

the situation is...a market at the top of the food chain was created and these types of people get these kind of guarentee in their contract. if they dont, they walk...because there is only a handfull of people who can really do their job.

another example...its like telling all the player on the phoenix coyotes to return their salary cause the team sucked and the team lost money...and now are in bankruptcy protection. do you think professional hockey players should get paid millions if they dont produce and the team tanks and loses money?

sux for us...great for them...but that's life.
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I understand your points:) . This brings into play the whole active vs passive management debate. Maybe the CPP should start indexing more of their portfolio and give some of these overpriced money managers their walking papers?
 
Also in the story there is a reference to calculating bonus based on 4 year average or something like that - the 3 previous years we good and last year was bad.. ok really bad.
 
i've nvr found that following the index is a effective way to invest your money...nor is a GIC. I find that the returns are not nearly as good...and i find that most canadian mutual funds over a 10 year period have avg'd well beyond what a GIC or an index fund would give you. even with the down turn...a lot of canadian mutuals have still avg'd over 7% per year over the last 10-15 years. i would assume even if you were a multi millionaire, you mught get 5-6% on your gic which u need to declare all of it for tax purposes.

though i dont know an extreme amount of information about index fund...can someone shed some light on it? i obviously know how they work. but what are the returns like?
 
soulsphere said:
at the end of the day, they get a percentage of the money they manage. our governments, investment firms pay them like that in order to obtain and retain good talent. though it seems retarded to make that kind of money when the fund tanks, but that's just the way it is.

for example..on a smaller scale...the owner of a mcdonalds that lost money this year goes to their store manager and tells him to return his salary cause the store lost money...which obviously doesnt make sense.

the situation is...a market at the top of the food chain was created and these types of people get these kind of guarentee in their contract. if they dont, they walk...because there is only a handfull of people who can really do their job.

another example...its like telling all the player on the phoenix coyotes to return their salary cause the team sucked and the team lost money...and now are in bankruptcy protection. do you think professional hockey players should get paid millions if they dont produce and the team tanks and loses money?

sux for us...great for them...but that's life.
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Those are ridiculous examples. A BONUS is not the same as a SALARY. Apples and oranges my friend. Did the hockey player receive a Bonus for winning the Cup? That would be comparable.
 
Hurricane Hank said:
Those are ridiculous examples. A BONUS is not the same as a SALARY. Apples and oranges my friend. Did the hockey player receive a Bonus for winning the Cup? That would be comparable.
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you do bring up a good point. but what im saying is...the point is...this is how their contracts were setup. its how they get paid. the problem is not the fund manager itself. he just got paid and went to do his job. talk to the people who approved the contract.

a lot of these fund managers get paid based on the amount of money they manage...+ performance bonus. so if the fund tanks...do you strip everything they should have made?

do you go to an SP and after a lay and if it wasnt that great do you ask for your money back? how about a dancer? if the dance was shitty..do you not pay them?
 
soulsphere said:
at the end of the day, they get a percentage of the money they manage. our governments, investment firms pay them like that in order to obtain and retain good talent. though it seems retarded to make that kind of money when the fund tanks, but that's just the way it is.

for example..on a smaller scale...the owner of a mcdonalds that lost money this year goes to their store manager and tells him to return his salary cause the store lost money...which obviously doesnt make sense.

the situation is...a market at the top of the food chain was created and these types of people get these kind of guarentee in their contract. if they dont, they walk...because there is only a handfull of people who can really do their job.

another example...its like telling all the player on the phoenix coyotes to return their salary cause the team sucked and the team lost money...and now are in bankruptcy protection. do you think professional hockey players should get paid millions if they dont produce and the team tanks and loses money?

sux for us...great for them...but that's life.
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Ur an idiot.

only a handfull of people?.... OH I get it you know that because .... ur an idiot.

lol
 
It does seem petty, but it also seems a lot of the screaming's the result of the stupid choice of the word to name these contractual, non-results based payments. For simple folk like me, a 'bonus', like a 'tip' is an ex gratia payment that you get for doing better than just your job. So it boggles my mind, and I think, "Skullduggery!", to hear someone got a bonus for losing money, or for just showing up.

It's been suggested some of these guys were comped based on their portfolio size—fine, let's call that a commission. And the eHealth Ontario CEO who got a 35% bonus after four months—lets call that a progress payment.

Wouldn't 'solve' anything, but my blood pressure would improve.
 
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PeterBoms said:
Ur an idiot.

only a handfull of people?.... OH I get it you know that because .... ur an idiot.

lol
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first off ur an idiot. i didn't literally mean like only a few people in the world can do it. what im saying is that not just anyone can stroll in and say..hey! im gonna be a fund manager. if its soo ez to do...u might as well pick up a book for dummies...and in your case...a book for idiots....and manage your own money and see how you do....but that is assuming if you have money...which im assuming ur a bum.
 
part of the nissue is governments and crown corporations say we have to pay top dollar to get top talent. I could live with that if they actually got top talent they don't . The top talent is out in the privater sector and tends to stay there.

Something like the CPP does not really need an innovator in the drivers seat it needs a manager .

Years ago the CPP was limited to loaning money to provinces and municipalities for road work and such. It did fine until they changed the rules. Prior to that the municipalities could get money for projects at more or less prime and the CPP had a steady rate of return.
 
landscaper said:
Years ago the CPP was limited to loaning money to provinces and municipalities for road work and such. It did fine until they changed the rules. Prior to that the municipalities could get money for projects at more or less prime and the CPP had a steady rate of return.
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Since then, the CPP has broadened its investment strategies and have delivered a higher rate of return.

Let's say for a second that the folks managing the CPP might as well come from the counter servers at Burger King. Heck, even if they came from the run-of-the-mill professional investment advisor.

How many billions would the CPP fund be down then?

I'm not saying the money is about better-than-market returns; it's more complex than that, and the CPP isn't going to consistently deliver better-than-market returns (because of its size, there are further complications). But these folks do deserve more money than the rest of us.

Is the current pay too much? That's a tougher question, but I don't think it is too much.
 
mmouse said:
Um, I think you missed the point. The issue is whey did they get any bonus when the fund lost money.
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Umm, maybe because they can't control the market?

You could be the smartest guy in the world but if the market tumbles quickly, which it did, you're going to suffer losses.

How do we know they didn't mitigate the losses by millions or billions, thereby reducing the losses from what they would have otherwise been?

How do we know that they didn't actually increase earnings, after adjusting for the market crash that everyone suffered, and actually outperformed others?

I'm not saying whether these guys deserved it or not. The truth is we don't know whether they deserve it or not because we don't know what their terms and conditions of employment are/were.

Don't be just another ignorant sheep who sees the word "bonus" and thinks it must be undeserved because someone (likely yourself) is suffering.
 
Keebler Elf said:
Umm, maybe because they can't control the market?

You could be the smartest guy in the world but if the market tumbles quickly, which it did, you're going to suffer losses.

How do we know they didn't mitigate the losses by millions or billions, thereby reducing the losses from what they would have otherwise been?

How do we know that they didn't actually increase earnings, after adjusting for the market crash that everyone suffered, and actually outperformed others?

I'm not saying whether these guys deserved it or not. The truth is we don't know whether they deserve it or not because we don't know what their terms and conditions of employment are/were.

Don't be just another ignorant sheep who sees the word "bonus" and thinks it must be undeserved because someone (likely yourself) is suffering.
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These so called investment hotshots last year would have been better off just investing the cpp funds in gics:p .

I realize that all the financial pros had a bad year last year but to be paid a bonus too lose 24 billion dollars ( 18.6%) is IMHO a joke. They should have donated their bonuses to charity just like the money managers of the Caisse did.

The managers of the quebec pension fund (caisse) I believe donated their bonuses to charity. The money managers of the caisse were the geniuses who invested billions of taxpayer dollars into ABCP---lol. They lost quebec taxpayers 24% last year. Asset backed commercial paper turned out to be toxic assets that had no liquidity whatsoever.
 
squash500 said:
IMHO it does seem ludicrous to pay these guys bonuses for losing 18.6% last year:confused: ?

However they probably justify their bonuses by claiming that they outperformed the major market indexes (xiu, xic, xsp, xin) last year which IMHO is a very weak argument.

IMHO the CPP is invested too much in equities. Maybe the CPP should readjust their asset allocation strategy going forward so these big yearly losses won't happen again?
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I agree with your first point. If the loss could have been double under a less reactive management then their bonuses are well worth it.

I would say further that Dave Denison is a steal at his bonus. The man used to run Fidelity Canada and would have made a lot more. He is as solid a leader as you will find in this country, and in large part because of he and his team we have a social security program that is not going broke like the US program. What they have put in place is the model other countries around the world are doing. In short they have saved our program in relatively short order.

BTW I am not Dave Denison. But I know the man and highly admire him. We are lucky to have him at the helm.
 
Top Northerner said:
BTW I am not Dave Denison. But I know the man and highly admire him. We are lucky to have him at the helm.
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Are you Andrew Willis who can't stop defending the CPPIB bonus on the Globe?

Have a read at analysis from someone who understands that CPPIB spent most of their time "working on their compensation package" aka gaming their benchmarks. Their compensation deals only have upside for taking risks. No downside features like high water marks.

http://pensionpulse.blogspot.com/2009/05/cppib-suffers-19-loss-in-fy2009.html

http://pensionpulse.blogspot.com/2009/05/why-are-cppibs-senior-managers-smiling.html

The best CEO in Canada now is Gord Nixon. Royal had $5 billion profit in 2008 less than usual but profit. Gord Nixon's total compensation for 2008: 8.75 million - 4.95 million declined = 3.8 million and he's spending 2.45 million of that buying RBC common stock. That leaves him 1.35 million for hobbying.

http://www.rbc.com/newsroom/2009/0202-proxy.html

http://www.thestar.com/article/581270

CPPIB lost $23 billion in 2008 and wiped out four years of contributions by every single Canadian employee. David Denison and all those other managers at CPPIB have no business taking 1.1 to 2.4 million dollar pay packages for 2008.
 
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