Share-based awards and options—not salary—powered recipients to the upper echelons of BIV’s list of top-paid executives at public companies in B.C. last year.
It is not a new phenomenon, but it is one that has increasingly drawn public attention given how much it has powered wealth for some billionaires south of the border.
Tesla Inc. (Nasdaq:TSLA), for example, has provided these kinds of pay packages for CEO Elon Musk, helping make him the richest man in the world.
Its intent has been to keep him at the helm and be inspired to increase long-term share price growth.
The electric-vehicle maker announced Aug. 4 that Musk will get US$29 billion in stock options in a new pay deal. That pact comes into effect if certain conditions are met, such as that he stays for two years, and that Musk does not win his appeal of a court judgment last year that struck down a previous options-based pay deal.
Musk’s wealth fluctuates but he was estimated to be worth US$342 billion in Forbes’ 2025 edition of its Richest People In The World list.
No one in B.C. comes close to Musk’s level of compensation, although the desire to use shares and options to attract top executives is alive and well.
Telus CEO tops list with $20.6 million in total compensation
Telus Corp. (TSX:T) CEO Darren Entwistle led B.C.-based public-company executives last year with $20,616,308 in compensation. Of that, $16,003,897 was in shares. Only $1.6 million was in salary.
Telus told BIV in an email that starting in mid-2024, Telus will no longer pay Entwistle a salary, and it will instead provide the amount that would have been salary in shares.
Entwistle last year also received a $1,187,200 bonus, $1,683,000 in pension benefits and $142,211 in other compensation.
Close on Entwistle’s heels for total compensation was James Kessler, CEO at RB Global Inc. (TSX:RBA), formerly known as Ritchie Bros. Auctioneers, with $20,074,293. That included $1,603,899, or about eight per cent, in salary. At $16,130,053 in share-based awards, Kessler topped even Entwistle in that category.
Lululemon Athletic Inc. (Nasdaq:LULU) CEO Calvin McDonald earned $19,933,215 in total compensation last year—good for the No. 3 spot on BIV’s list.
Of that, 75.6 per cent was some form of potential corporate equity: $7,533,659 in shares and $7,533,863 in options.
Only $1,838,892, or 9.2 per cent, of McDonald’s compensation came in salary.
“The largest component of most senior executives’ pay is equity incentives—stock options, RSUs [restricted share units], PSUs [performance share units]—and this heavy emphasis is driven by stakeholder pressure to have the majority of a senior executive’s pay be ‘at-risk,’ and directly aligned with the fortunes of shareholders,” Lane Caputo Compensation Inc. managing partner Michael Caputo told BIV.
Options always come with vesting periods that executives endure before they are able to convert the awards into sellable shares.
Executives who are granted shares usually also have to wait a certain time period, such as three years, before they can sell them, Caputo said.
Shares provided to executives are not usually newly issued shares but rather are ones that boards of directors have pre-approved and put in a corporate treasury account, he added.
Another caveat, Caputo said, is that the reported values of share-based awards and options are usually not the actual values of those awards when the shares and options were granted.
“It’s reported more than a year later,” he explained. “The share prices could have increased materially or decreased materially.”
The value of equity incentives reported in corporate documents is also usually an estimate of the future value of these incentives, based on a valuation model, such as Black-Scholes Merton, he said.
These caveats mean that it is impossible to create a true list of exactly how much each executive makes in compensation.
Western Compensation & Benefits Consultants partner Barry Cook told BIV that it is interesting that Entwistle makes so much money in share-based compensation instead of salary given that Telus is largely a utility.
It has diversified its business into some growth-oriented sectors but remains a telecom, in the utilities sector, with predictable and steady revenue, he said.
Indeed, its share price during the past decade has been largely flat, and the company pays an annual dividend of about 7.5 per cent.
“It used to be kind of folklore that widows and retired people would invest in utilities because they have a monopoly, and they continue to generate revenues by virtue of the fact they have that monopoly, and they have a defined payout ratio,” he said.
Telus’ competitors, however, similarly pay CEOs largely in shares.
Toronto-based BCE Inc. CEO Mirko Bibic, for example, made a total of $12,824,191 in compensation last year. That included $8 million in shares and only $1.4 million listed as salary.
Cook said the corporate drive to pay executives in shares and options is most pronounced in sectors such as technology and mining.
“If you look at mining companies in the exploration stage or high-tech companies that have got a patent or an invention but have not gone to the market yet, so they are at an early stage, there are reasons why they try to find mechanisms to, hopefully, incent the executive group to pull rabbits out of a hat and achieve big things for shareholders,” Cook said.
Another dimension to this is that those companies are usually cash poor, he added.
“They may have an income statement with a revenue line that has nothing on it,” he said.
Those are the kinds of companies where it most makes sense to pay executives huge share and options packages, he said.
BIV research, however, shows that the 47 mining-sector executives on this year’s top-paid executives’ list tended to make a smaller percentage of total compensation in options and share-based compensation than did the average executive on that list.
That may be because they tended to be at established and large mining companies and not start-up exploratory ventures.
When only salary, options and share-based compensation is included, mining-sector executives on this year’s list earned 31.06 per cent of that pay in salary. That compares with non-mining executives who earned 18.15 per cent of compensation in salary, when only salary, options and share-based compensation is included.
When the top-paid three executives are excluded from that calculation, because they are all non-mining executives with huge equity awards, things look slightly different, but not much.
Mining executives generated the same 31.06 per cent of their pay in salary. That compares with non-mining sector executives who earned 20.52 per cent of compensation in salary.
Smallest salary
Aritzia Inc.’s (TSX:ATZ) executive chair Brian Hill had the smallest salary among executives on BIV’s top-paid executives list: $1.
Hill, who founded the company 41 years ago and has always been its largest shareholder, was also compensated with $2.5 million worth of shares and $2.5 million worth of options. Along with other awards, he generated $5,008,402 in total compensation, which ranked him No. 36 on BIV’s list.
Aritzia told BIV that Hill works in a full-time capacity and is focused on developing corporate strategy. It would not discuss the rationale for his compensation structure.
BIV reported in February that Hill used a bought deal to sell $66,357,500 worth of his Aritzia shares. At the time, he maintained a 17.3-per-cent stake in the company, which would have been worth about $1.37 billion.
Cook said the best way to determine whether Hill’s pay package is appropriate is to compare him with equivalent founders of large clothing companies that are executive chairs.
His status is distinct, however, given his length of time with the company.
Chip Wilson may have been somewhat comparable, at Vancouver’s Lululemon Athletica Inc. (Nasdaq:LULU) in the 2012 fiscal year, although his title was chair, not executive chair. He left that board in 2013, after having founded the company 15 years earlier.
Lululemon does not have an executive chair. Instead, it lists Martha Morfitt simply as chair, and she made a total of $433,587 in 2024, including $274,148 in salary.
Bonuses are not as common, with many executives not receiving one.
“Bonuses should be tied to financial and operational metrics that are set at the beginning of the measurement period for the fiscal year, and measured at the end to see how the performance stacked up against what the targets were,” Cook said.
That links the compensation to short-term performance.
Cook said the downside and risk of paying large bonuses instead of equity-based compensation is that it could incent the executive team to try to maximize short-term gains by sacrificing longer-term stability and performance.
