The Canada Pension Plan Investment Board has rewarded its chief executive officer handsomely for a fiscal year which saw a “renewal” of the fund’s senior management team.
Mark Machin, the CEO of the CPPIB, was paid a total of C$5.265 million ($3.92 million USD) for the year ending on March 31, 2019, according to the board’s annual report. That compensation was a mix of salary and incentive pay, including in-year and deferred awards, the report showed.
According to the report, the CPPIB had estimated that it would pay Machin C$3.565 million for the year. However, bonuses bumped his final pay up by C$1.7 million.
Machin had earned roughly C$4.569 million in fiscal year 2018, and $4.507 million in fiscal year 2017, according to past annual reports. Although Canadian public pension funds typically offer much higher compensation compared to their U.S. counterparts, Machin’s fiscal year 2019 pay was on the higher end of the spectrum: Ontario Teachers’ Pension Plan paid CEO Ron Mock about $4.893 million in 2018, according to its annual report, while the Ontario Municipal Employee Retirement System’s annual report reveals that it paid CEO Michael Latimer nearly $4.127 million.
CPPIB attributed Machin’s hefty fiscal year 2019 bonus in part to his having “successfully onboarded” a new leadership team following the exit of several senior investment professionals. The exodus began in February 2018, when CPPIB announced the retirements of senior managing director and chief operations officer Nick Zelenczuk and global head of real assets Graeme Eadie. In that same announcement, the investment board also said that senior managing director and global head of public markets Eric Wetlaufer was leaving the firm.
Other departures followed, including senior managing director Pierre Lavallée and head of infrastructure Cressida Hogg. In the wake of these exits, John Graham was appointed to lead the credit investments team, Suyi Kim was named head of Asia Pacific, Deborah Orida was promoted to head of global active equities, and Poul Winslow was appointed to lead capital markets and factor investing.
In April 2018, when these appointments were announced, the investment board called the change in leadership a “planned renewal.”
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According to the CPPIB report, Machin filled roughly one-third of senior-level vacancies with candidates who already worked for the investment board, which CPPIB said was indicative of its “excellent bench strength.”
He was also was rewarded for focusing on gender parity in hiring and promotion decisions. According to CPPIB, representation of women across the organization improved to 45 percent, while the investment department’s female representation increased from 32 percent in fiscal year 2018 to 35 percent in fiscal year 2019.
Another component of Machin’s bonuses was his ability to achieve “strong” returns, net of expenses. CPPIB said its base net return was 8.9 percent for the fiscal year. The best-performing asset class was foreign private equity, which netted an 18 percent return.
The fund paid C$1.138 billion in management fees, C$488 million in performance fees, and C$477 million in transaction costs during the year, according to the report, which noted that management fees decreased by C$152 million during the fiscal year.
The lower fees were “driven by lower performance fees paid to external fund managers as a result of underperformance in public market strategies in our second and third fiscal quarters,” according to the report.