As pandemic spreads, wave of executives slash their compensation

Photo: The Canadian Press

Murray Mullen says he was focused on the bigger picture when he approached senior executives and directors at his trucking and logistics business about taking pay cuts in response to the COVID-19 crisis.

The chief executive of Mullen Group Ltd. projected how the virus could wreak havoc on the Alberta-based business, which was founded by his family and is now traded on the Toronto Stock Exchange. He said it was essential to start making plans for the company to sustain itself into the early summer.

"My primary objective is this: How do I make sure the business is strong so that I'm around when demand improves?" Mullen explained by phone from his home in Victoria.

"I can't do anything about this (virus), nobody can do anything about this, but you've got to get people back employed. The most comforting thing I can do is say, 'Look, the company's strong. It'll be around in three months.'"

The board committed to forgoing any pay for 90 days, while his senior teams have "taken somewhere up to a 50 per cent pay cut," he said. Mullen himself gets a salary of $1 per year, with much of his pay made up of performance-based compensation, which he added won't amount to much this year.

Several other Canadian companies have made similar financial commitments in recent days that put temporary restraints on executive salaries, an effort partly to show employees that belt tightening isn't just happening in the lower ranks. But the move can also help companies slow the bleeding of cash that might happen as the bottom falls out of their revenues.

In the oil and gas industry, executives at Canadian Natural Resources and Ensign Energy Services Inc. were among the first Canadian operations to commit to lower salaries in the short term as part of broader reductions in capital spending. Others companies are expected to take similar steps in the coming weeks.

Cineplex Inc. has outlined changes to its leadership pay structure that will take place over a month, after it temporarily laid off part-time employees and closed all movie theatres through at least April 2. Its senior executive team will forgo their salaries for the first two weeks, and see a 40-per cent reduction in pay for the final two weeks. Other lower-ranking leadership would see salary reductions ranging from 55 per cent to more than 60 per cent, depending on their role.

The monetary challenges facing Cineplex are unique, however, as the movie exhibitor approaches a June 30 deadline for the $2.8-billion takeover of the company by Cineworld PLC. One of the conditions of the transaction is that Cineplex keeps its debt below $725 million, while it's headed into a period some observers say could totally reshape the movie business.

Other companies are focused on a broader reduction in capital spending, which in the resources sector has included delaying major projects.

Energy giant Canadian Natural Resources Ltd. said last week its president would see a salary reduction of 20 per cent. Other members of its management committee will see pay reduced by 15 per cent while vice-presidents and board members would see a smaller reduction of 10 to 12 per cent.

Oilpatch company Ensign Energy Services Inc. announced a pay cut for its top executives on Monday, lowering the salary of its president and chief operating officer by 20 per cent and its chair by 40 per cent.

Recipe Unlimited Corp., which owns marquee brands such as Swiss Chalet, Harvey's and St-Hubert, outlined a voluntary suspension of compensation for its CEO on Tuesday until its locations are "fully back open for business." The food services company, which currently only offers pick-up and delivery options, said the board's compensation was also frozen among other changes that include dividend payment suspension and a temporary halt to royalty fee collection.