“More symbolic than effective”: Mitch Frazer on cutting exec payouts in distressed companies

October 21, 2019

Pensions and Employment chair Mitch Frazer told The Globe and Mail that restricting the payouts for executives at bankrupt companies could have a negative effect on the longevity of the company.

The Globe reported a newly released Conservative Party platform would “restrict large payouts to executives at bankrupt companies with underfunded pension plans”. The report said the move appears to target “high-profile situations” of insolvent companies where executives were still receiving their bonuses despite the company failing.

Mitch said while it may look like the right move from the outside, it in fact could have the opposite effect.

“I think it would be more symbolic than effective,” he told the Globe.

“It looks good to attack corporate executives, but functionally it’s not going to do much.”

Mitch added that top executives could leave the company without things like retention bonuses, could resulting in liquidation and “locking in pension losses for plan members and leaving no opportunity for the plan to return to better health.”

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