Former MPI CEO’s $50-K contract an ‘insurance policy’: Guimond

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This article was published 30/09/2014 (3492 days ago), so information in it may no longer be current.

Former Manitoba Public Insurance president and CEO Marilyn McLaren, who retired Feb. 21, was paid $50,000 as an “insurance policy” in case incoming MPI boss Dan Guimond keeled over or quit.

The revelation came Tuesday in an exchange between Guimond and Progressive Conservative MPI critic Kelvin Goertzen during a legislative standing committee meeting.

“I view Ms. McLaren’s contract as an insurance policy and when there is a transition of the CEO you don’t know how the CEO is going to, if it’s going to work out,” Guimond told Goertzen.

“There is also the possibility of the CEO saying, that wasn’t for me and deciding to walk away, and there’s also health. I could get sick and so on, so from a risk mitigation perspective, and that is what this contract is about is risk mitigation, and if I was to leave or get injured or not be able to perform my duties then the board of directors has an insurance policy so to speak that has access to the previous CEO to buy time to find another CEO.”

Guimond also said McLaren has done no work for MPI, contradicting what the government said in May when the Opposition PCs raised the $50,000 contract.

Attorney general Andrew Swan, minister responsible for MPI, said at the time that it’s “very common” for public and private corporations to hire a former CEO as a consultant after their retirement.

Swan also said McLaren’s advice would be important to MPI when it appears before the Public Utilities Board with its next Autopac rate application, Swan said.

“(It’s) very helpful to have somebody with Marilyn’s experience to guide that process,” he said.

Guimond told the committee that that’s not the case.

“From a corporate perspective it was always an insurance policy we never deviated from that, we’ve always talked about it within that context,” he said. “I think there were some questions and that sort of appeared in the paper somehow, but the corporate point of view, and I have been very consistent with that has always been an insurance policy and for the reasons that I have articulated previously.

“The contract, as the risk goes down, over time, (MPI’s) board of directors also constructed the contract that as the risk, because it is a year duration, as the risk drops down that if we, versus an insurance policy in the sense that you use it or lose it, we would be able to recover the $50 000 dollars by just possibly giving Ms. McLaren some work so that’s how the contract was constructed and whether that is going to happen or not we don’t know that.”

To which Goertzen asked: “So what work has she done until now under this contract?”

“None,” Guimond replied.

“But is she getting paid?” Goertzen asked.

“Yes she is,” Guimond answered. “It’s an insurance policy that if something was to happen to me as I assume the position that the board of directors for risk mitigation purposes will have access to Marilyn. And the fee that she is getting right now being a retired individual is that the board of directors has access to Marilyn within 48 hours of request or otherwise as mutually agreed so in terms of risk mitigation the board of directors negotiated an agreement with the ex-CEO to say that if I was to pass away or just walk away from the job or so on that they have access to Ms. McLaryn to buy some time. It’s purely an insurance policy it’s all for proper risk management.”

McLaren’s retirement compensation package, according to a document obtained by the Tories in a freedom of information request last spring, is $488,991.52 in salary, benefits and retirement allowance this year.

McLaren had been employed by MPI for 35 years when she left the corporation. At a pay rate of $300,000 per annum, McLaren would have been entitled to a retirement allowance alone of just over $400,000.

MPI pays departing members of its management committee a retirement allowance equal to two weeks’ salary for each year worked.

MPI appears before the PUB Oct. 22 to ask for a 3.4 per cent Autopac rate increase for next year.

Guimond has said the main reason for the rate hike was a bad winter with a large increase in claims severity.

“In the face of such unpredictable weather, rising claims costs, increasingly complex vehicle repairs and fluctuations in investment income, we continue to exercise financial restraint and ensure all expenditures are appropriate and beneficial to Manitobans,” Guimond said in June when MPI’s rate application was filed at the PUB.