$7M bonus as CPP loses $24B

[squash500]

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.

Thanks for posting these excellent financial links . I also agree with your concise analysis of the situation!

 

[mmouse]

Don't be just another ignorant sheep who sees the word "bonus" and thinks it must be undeserved because someone (likely yourself) is suffering.

You make some good points. To be honest I'm bitter than I'll never make that kind of coin.

However, I would be very interested to see exactly what calculations and benchmarks were used to determine that the CPP performed so well to warrant $7m in bonuses. Although, if they were in fact based on the past 4 years, that would make sense.

 

[Questor]

Four top executives of the Canada Pension Plan Investment Board pocketed nearly $7 million in bonuses this year despite losing $24 billion of taxpayers' money in bad investments.

Come on guys. Put your thinking caps on. Can't someone come up with a way to blame this on CAW and Mayor Miller?

 

[Anynym]

These so called investment hotshots last year would have been better off just investing the cpp funds in gics .

When you're running a fund with a few million dollars in it, you have limited flexibility in how quickly you can shift your investments: if you were heavily invested in one sector you simply can't sell it all instantly, and by putting it all for sale you're driving the market down and costing your investors hundreds of thousands of dollars just by trying to change sectors.

When you're running a fund with several billion dollars, you have no flexibility - you are driving the market down if you try to shift even a portion of the fund.

And it's not limited to loss on sale - you're driving the cost up of what you're looking to buy.

Glad to hear Andrew Willis is defending the bonuses - he's a wise individual. (No, I'm not him, although I have met him and have friends who are friends of his.)

 

[Mencken]

Um, I think you missed the point. The issue is whey did they get any bonus when the fund lost money.

Probably because they only lost 18.6% when the market when down a lot more than that.

It is very naive to think that a fund with billions of dollars, including rules that require funds to be invested, would not lose a lot of money when the market boes down like it did.

They probably deserve the bonuses for keeping the loss to 18.6%. They probably saved billions compared to what it could have been.