In a year marked by significant challenges, BCE Inc., the parent company of Bell, has come under fire for awarding substantial bonuses to its top executives despite a backdrop of layoffs, declining profits, and a plummeting stock price. Mirko Bibic, the CEO, received nearly $2.4 million in bonus money, contributing to a total compensation of $12.8 million for 2024, which is a slight decrease from the previous year.
According to reports, BCE paid more than $5 million in bonuses to its executives, even as the company faced a $2.1 billion loss in its media division and announced the layoff of 4,800 workers, the largest in nearly three decades. The company's stock price has dropped by 30% over the past year, reflecting a broader struggle within the telecommunications sector.
Bibic's compensation package has been a point of contention, especially as BCE grapples with over $40 billion in debt and a significant decline in shareholder returns. In fact, BCE had the worst performance among the three major telecom companies in Canada, with a staggering 30% drop in shareholder returns, compared to declines of 26.1% at Rogers Communications Inc. and 11.5% at Telus Inc.
Furthermore, BCE's decision to pursue a $5 billion acquisition of U.S.-based Ziply Fiber has raised eyebrows among investors, particularly as it coincided with the company's first pause in annual dividend growth in 16 years. This strategic move was met with skepticism, prompting concerns about the company's financial health and future direction.
Despite these challenges, Bibic's bonus was based on certain performance metrics, including achieving savings of $200 million through workforce reductions. While the company missed its profit targets, it managed to pay out a portion of its target bonus linked to free cash flow, a metric that assesses the cash generated from operations after capital expenditures.
According to BCE spokesperson Ellen Murphy, Bibic's base salary will remain unchanged in 2025, and no increases are anticipated. She emphasized that a significant portion of Bibic's pay is tied to BCE's stock performance, which has been declining sharply. The value of his stock awards has also decreased significantly, with his 2022 stock grant losing more than half its value.
As of the end of 2024, the value of Bibic's 2023 stock grant was trending to be 48% below target, while the 2024 grant was projected to be 47% below target. Murphy noted that the decrease in the value of equity grants has been more pronounced than the overall decline in shareholder returns during the same period.
In light of the ongoing financial struggles, BCE has been forced to make difficult decisions, including announcing plans to sell its $4.7 billion stake in Maple Leaf Sports & Entertainment to Rogers in an effort to alleviate some of its debt burden. The company is also looking to divest 45 of its 103 radio stations.
Overall, the situation at BCE raises important questions about executive compensation practices, particularly in times of economic hardship. While the company has defended its bonus structure by pointing to specific achievements, many shareholders and analysts are calling for a reevaluation of how compensation is tied to company performance and the broader economic context.
As BCE navigates these turbulent waters, the implications of its decisions will be closely watched by investors and industry observers alike. The company's ability to stabilize its finances and regain investor confidence will be crucial as it moves forward.
The ongoing dialogue surrounding executive pay amid layoffs and losses reflects a growing concern among stakeholders about the priorities of corporate leadership. As BCE attempts to chart a course through these challenges, the balance between rewarding executives and addressing the needs of employees and shareholders will likely remain a contentious issue.
In summary, while BCE's leadership has been recognized for certain achievements, the broader context of layoffs, declining stock prices, and heavy debt raises critical questions about the sustainability of its current strategies and the fairness of its compensation practices.
