CORRECTION – Sept. 30, 2015 – 0925 CST – This story originally mistakenly stated Schmidt had overseen the Wheat Pool’s transformation to a publicly-traded company. The Saskatchewan Wheat Pool actually became a publicly-traded company in 1996, four years before Schmidt arrived.
Former Viterra president Mayo Schmidt will earn a base salary of roughly $800,000 per year as the new chief executive officer of Hydro One, the Ontario crown utility company that is selling a portion of its equity in an initial public offering next month.
But his total compensation package could rise to more than $4 million a year if certain conditions are met, according to a preliminary prospectus filed with securities regulators in mid-September.
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Hydro One announced in August that it had hired Schmidt, the former president and CEO of Viterra, to oversee the crown utility’s transition to a publicly traded company.
The Ontario government intends to raise approximately $9 billion by selling off a 60 percent stake in the company over an undefined period of time.
Schmidt, who assumed his new position with Hydro One in early September, will oversee an initial public offering, which will offer 15 percent of the utility’s shares for sale in November.
He will also manage future transactions that will eventually see the province’s overall ownership share in Hydro One shrink to 40 percent.
Among other things, Hydro One owns Ontario’s electrical transmission grid and provides electricity to approximately 1.4 million customers in the province.
Schmidt’s compensation package has ruffled feathers among some Ontario taxpayers.
If he meets all of his performance targets, Schmidt in his first year at Hydro One will earn more than three times as much as his predecessor, Carmine Marcello, who earned $1.2 million in 2014.
Last month, Ontario energy minister Bob Chiarelli defended the terms of Schmidt’s compensation package, suggesting that specific performance targets must be met before Schmidt earns his maximum compensation.
David Denison, chair of Hydro One’s board of directors, said Schmidt is the ideal person to lead the company’s transition.
“We believe that Mr. Schmidt is the ideal person to lead Hydro One in is new era as a publicly held company,” Denison said in a corporate news release.
“As the former CEO of Viterra and its predecessor Saskatchewan Wheat Pool, Mr. Schmidt has an admirable track record of leading large scale business transformation and growth while generating value for investors employees and customers alike.”
Schmidt’s arrival at Hydro One comes roughly a year after he was named head of Louis Dreyfus Commodities, the privately owned commodities trading company with operations around the world.
Schmidt’s employment arrangement with Louis Dreyfus was announced in November 2014 but was mutually terminated less than two months later following a detailed analysis of the deal’s terms and conditions
Over the years, Schmidt has amassed some extraordinary credentials, primarily through his involvement in the Canadian agriculture and agri-food sectors.
He held a number of key management positions at General Mills Inc., before being named president of ConAgra Grain Canada.
In 2000, he was named chief executive officer of the financially troubled Saskatchewan Wheat Pool.
A few years later, he became Sask Pool president and transformed the fortunes of the publicly-traded company.
Schmidt then spearheaded a $2 billion acquisition of Agricore United, a $2.2 billion acquisition of ABB — the former Australian Barley Board — and renamed the new corporate entity Viterra.
In December 2012, he oversaw the sale of Viterra to Switzerland based mining and agriculture giant Glencore Plc.
In an effort to reduce company debt, Glencore recently announced that it is looking to sell some of its Canadian agricultural assets as well as a share in its global agriculture portfolio.
On a personal level, Schmidt’s involvement in the Viterra-Glencore deal has paid off handsomely.
In 2012, a management information circular sent to Viterra shareholders disclosed that Schmidt stood to gain nearly $30 million if Viterra shareholders voted in favour of the company’s proposed $6.1 billion sale to Glencore.
At the time, Schmidt owned 633,211 common shares in Viterra.
Those shares were worth approximately $10.3 million based on the deal’s proposed share value of $16.25 per unit.
Additional options, benefits and severance payments due to Schmidt were valued at roughly $19 million.
In 2011, the year before the Viterra sale, Schmidt’s annual salary and bonuses at the Canadian grain handling company were estimated at $5.1 million.
Contact brian.cross@producer.com
