On Monday, members of Essex Council revoked the portion in the Shareholder Declaration for the E.L.K. Energy Inc. that requires its Board compensation to be approved by the shareholder, the Town of Essex. Instead, the Board will be able to set its own remuneration, based on the recommendation of a third-party consultant.
It also passed that those consultant fees be paid by E.L.K., and that moving forward the Board notify the Corporation of the Town of Essex before any change in remuneration.
E.L.K. is a utility owned by the Town of Essex, which provides hydro to areas of Essex, Kingsville, and Lakeshore.
This decision came after members of Essex Council listened to a presentation about E.L.K Energy Inc. Director Remuneration for 2024, which Marjorie Richards of Strategic HR & Talent Management Consultant prepared.
Councillor Joe Garon Chaired this meeting, as Mayor Sherry Bondy and Deputy Mayor Rob Shepley declared a conflict of Interest as the Chairperson and Vice Chairperson of E.L.K., respectively.
The previous Term of Council approved the new composition would include the Mayor and Deputy Mayor of the Town of Essex, two members at large appointed by the Town of Essex Council who are E.L.K. customers in the Town of Essex, and two members at large appointed by the Town of Essex Council from either the Town of Kingsville and/or the Municipality of Lakeshore to represent E.L.K. customers outside the Town of Essex.
Richards noted that a confidential custom survey was developed as part of her report on the Board’s remuneration, and 13 LDCs were invited to participate, all similar in size and scope to E.L.K.
The survey requested annual stipends for Board Chairperson, Vice Chairperson, committee members, meeting fees, and pay for municipal representation. Information requested also included non-remuneration reimbursements.
The aggregate average, Richards explained, showed E.L.K.’s annual retainer was much lower. For instance, remuneration for E.L.K.’s Chairperson is $3600, Vice Chairperson is $3300, which is 94.6% and 39.4% respectively lower than the aggregated average.
Richards also spoke of meeting fees. Of the LDCs surveyed, only two did not pay meeting fees, of which E.L.K. was one. The average meeting fee was $369, with an average of six board meetings and three committee meetings. E.L.K. has eight board meetings and two finance committee meetings per year.
Four of the LDCs surveyed have an education policy, and the vast majority do pay for director training and education. Around half pays remuneration or reimbursement for special projects and assignments.
Based on the analysis, four recommendations were put forward for shareholder consideration, Richards noted. That included enhancing the direct annual stipend, adding meeting fees, enhancing opportunities and support for Board members’ continued industry and board education; and enhancing Board member reimbursements to include remuneration for special projects.
Her recommendation was to increase the Board Chairperson’s annual retainer to the average of its peers for remuneration and meeting fees. That would increase the Board Chairperson annual retainer to $7000 and the Vice Chairperson to $5500.
The recommendation for the introduction to meeting fees would be to have it align with the average of LDCs surveyed, which would be $350. She noted in the report that meeting fees are paid to compensate not just for attending the meeting but for prep work.
In speaking to the recommendation for remuneration for special projects, Richards said it is believed that if meeting fees are adopted, that would adequately compensate directors.
Councillor Kim Verbeek noted it was raised a long time ago that Essex was not compensating E.L.K. Board members as they should be, so an outside investigation was sought.
“It was a little more eye-opening than I expected,” she said, pointing to Richard’s calculation that combined the average LDC Board Chairperson stipend and the average board meeting fee for the number of meetings E.L.K. hosts per year. That total was $10,695. In looking at the Board Chairperson position, the E.L.K. remuneration currently is $3600.Garon asked about the total annual impact on the Budget for the four recommendations made. Jake Morassut, Director of Community Services, noted staff calculated that would be an impact of $44,800.
Garon added typically shareholders are not responsible for setting the level of remuneration for Board members. Essex has done that, he believes, since it has owned E.L.K. He wondered if there was an appetite to put the onus of compensation back on the Board.
Verbeek added it is clear this role is not the job of the shareholder and should be up to the Board.
Joe Malandruccolo, Director of Legislative Services, explained the requirement of the Board to come to the shareholder to approve Board member remuneration is because of a Shareholder Declaration made in February of 2023. That could be revoked, he noted.
Garon would make that into the motion Council passed.
Council revoked its role in setting remuneration for the E.L.K. Board, Malandruccolo noted Council members would see what that amount is when they receive the financial statements at the end of the year. If Council does not agree with the compensation amount, the shareholder could have the Board answer to the matter or remove the Board.
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