Hydro One Ltd. H -0.29% ’s Chief Executive Mayo Schmidt retired Wednesday, and the Canadian utility company’s directors agreed to also resign under a deal with the Province of Ontario, the company’s largest shareholder. “We promised the people of Ontario that we would lower their hydro rates and that started by addressing leadership at Hydro One,” the province’s new Premier Doug Ford tweeted Wednesday afternoon. One of Mr. Ford’s campaign promises was to “Clean up the Hydro Mess and fire the board of Hydro One and its $6-million-dollar CEO,” as Mr. Ford referred to the company’s now-retired chief executive on his campaign website. Information about Mr. Schmidt, whose 2017 compensation was valued at 6.1 million Canadian dollars (about US$4.6 million), was stripped from the company’s website on Wednesday and replaced with that of Paul Dobson, who joined the company in March as chief financial officer and will fill in as CEO until a permanent replacement is made. Under the terms of the agreement with Ontario, the province will nominate four of the directors; six others will come from a committee formed by representatives of Hydro One’s largest shareholders other than the province. The Canadian province owned Hydro One Inc., now part of Hydra One Ltd., a publicly traded company of which the province holds a roughly 47% stake, according to FactSet and Thomson Reuters data. The new board, which is expected to be in place by Aug. 15, is to appoint the new CEO, who will be the board’s 11th member. The company also has agreed to consult with the province on executive compensation. Mr. Schmidt, who joined Hydro One in 2015 ahead of the company’s initial public offering, will receive a lump-sum payment instead of postretirement benefits and allowances. Write to Maria Armental at maria.armental@wsj.com<doc-sep>Hydro One's CEO is retiring as part of an agreement between the Ontario government and the utility company that will also see the replacement of all board members. Premier Doug Ford vowed to fire CEO Mayo Schmidt during the campaign, repeatedly calling him ex-premier Kathleen Wynne's "$6-million man" for his annual salary and bonuses. Hydro One, which was partly privatized by the former Liberal government in 2015, was a hot topic during the recent Ontario election campaign with millions of residents outraged by rising hydro bills. Ford's campaign took aim at executive pay, which was going up even when the company's share price was falling in May. Hydro One announced Schmidt's departure, effective immediately, in a Wednesday news release. Moments later, Ford said the news marked a great day for the province. Hydro One's CEO Mayo Schmidt has retired as part of an agreement between the Ontario government and the utility company. (John Woods/Canadian Press) "I said that we were going to do this, and we did it," Ford told reporters at Queen's Park. Ford said Schmidt is getting "zero severance" as part of the deal. However, Schmidt will receive a $400,000 payout in lieu of post-retirement benefits and allowances, Hydro One said. According to the company's annual shareholders report released on March 29, Schmidt, who earned a $6.2-million salary last year, would be entitled to a $10.7-million severance if he were to be removed from his job by the board of directors. When reporters asked Ford why Schmidt wouldn't pursue that, Ford replied they would have to ask the ex-CEO himself. 'Relief to the people' The premier also said the move paves the way for a 12 per cent reduction in hydro rates, although Ford declined to explain how that would happen when pressed by reporters. "As sure as I'm standing here, those bills are going to come down 12 per cent," Ford said. "We're going to give relief to the people of Ontario." Previously, Hydro officials said only a few cents of each household's hydro bills go toward executive pay. Hydro One said a new board of directors will select the company's next CEO. (Darren Calabrese/Canadian Press) Hydro One said a new board of directors — four members of which will be nominated by the province — will select the company's next CEO, and the province will be consulted on the next leader's compensation. Paul Dobson, Hydro One's chief financial officer, will serve as acting CEO. Greg Rickford, the new energy minister, said the government will play a major role in reshaping Hydro One's board and "will expect it to act in the public's interest." Rickford said the government will also present legislation to improve transparency at Hydro One. "After years of rising electricity bills, this is a step towards our main goal — bringing down electricity rates for all Ontarians," he said. Hydro One's outgoing board chair, David Denison, said the agreement will provide "stability and clarity" to the utility's management moving forward, and he lauded Schmidt for his leadership. Schmidt "has exhibited strong and effective leadership throughout his tenure as CEO in guiding the transformation of Hydro One to a publicly traded company," he said. NDP energy critic Peter Tabuns said Schmidt's departure raises a number of questions, and demanded the government release the specific details of the deal reached with him. "Doug Ford needs to tell people what kind of backroom deal he worked out with Mayo Schmidt to get him to walk away, and if he's going to replace the board with his own high-priced insiders," Tabuns said in a statement. Paid by shareholders Hydro One was partially privatized in November 2015, with the Liberal government saying it planned to use the sale of shares to fund transit and infrastructure projects. By December 2017, the province had sold off 53 per cent of its stake in the company. The decision has come under a lot of criticism, including from the province's fiscal watchdog, who said earlier this year that taxpayers would have saved $1.8 billion if the government had taken on traditional debt to fund infrastructure projects instead of partially privatizing Hydro One, which has over $25 billion in assets and annual revenues of nearly $6 billion. ​ During the election, Hydro One, which is Ontario's largest electricity transmission and distribution provider, had stressed that ratepayers did not pay the majority of Schmidt's salary. "We have heard the feedback from our customers and the regulator about executive compensation," the company said in a statement in April. "That's why we decided earlier this year that customers will only pay for the CEO's salary as it was at the time of the [initial public offering]." Hydro One customers pay only two cents on their monthly bill for the CEO's compensation, the company said, adding that nearly 80 per cent of the total executive compensation package is paid for by shareholders.<doc-sep>
Send this page to someone via email Ontario Premier Doug Ford has confirmed plans to replace Hydro One’s board of directors and the retirement of the company’s CEO. Ford made the announcement at Queen’s Park on Wednesday afternoon during a scrum with reporters. “They’re gone, they’re done. They’re done. We’re going to turn a new corner,” Ford said. “We’re going to make sure we keep with our promise of reducing hydro rates by 12 per cent.” In a statement from Hydro One, officials said they struck an agreement with the Government of Ontario on the transition. Schmidt will be leaving the company effective immediately. “In connection with Mr. Schmidt’s retirement, he will receive amounts consistent with Hydro One’s retirement policies and his employment agreement as previously disclosed and will not be entitled to severance,” the statement said. Story continues below advertisement “Mr. Schmidt will receive a $400,000 lump sum payment in lieu of all post-retirement benefits and allowances.” Throughout the spring provincial election campaign, Ford repeatedly touted plans to fire the hydro company’s CEO, Mayo Schmidt — who he dubbed “the $6-million man.” Schmidt earned a $6.2-million salary in 2017. The company’s annual shareholders report released on March 29 said he would be entitled to at least $10.7 million in severance if he were to be removed from his job by the board of directors. Ontario NDP energy critic Peter Tabuns called on Ford to release full details on the transition deal with Schmidt and board members. Story continues below advertisement Wednesday’s statement said all of the current board members will resign and be replaced and that the transition should be finished by August 15. The new board of directors will be tasked with hiring a new CEO. Paul Dobson, who is currently Hydro One’s chief financial officer, was named acting CEO on Wednesday. — With files from The Canadian Press and Ryan Rocca #BREAKING | Hydro One CEO Mayo Schmidt will be retiring and the board members would leave on a staggered basis, according to company’s press release below. @globalnewsto #ONpoli #TOpoli pic.twitter.com/Cqq1e14ZL8 — Kamil Karamali (@KamilKaramali) July 11, 2018