Magna International Inc., easily the largest firm and home to the best-paid executives in the Plastics News' executive compensation ranking, has a compensation plan the company calls entrepreneurial. Critics call it extravagant.
Some shareholders object that the company's chairman, Frank Stronach, is part of a consulting firm, Stronach & Co., that received $31.5 million last year for providing management services. That's on top of the $4 million paid to Stronach personally from salary and stocks.
One of Canada's largest investors said it shows that Magna's board is not independent. To protest, the Ontario Teachers' Pension Plan voted against Magna's entire slate of directors.
``There is no justification ... that this is an amount that is related to the services he provided to the company in 2002,'' OTPP said.
Magna's return on investment was down 7 percent last year, and the company's executive pay system drew questions from shareholders at its May annual meeting.
Stronach told the meeting that the company's pay system rewards managers and employees with profit sharing, and has very low base salaries and ties most of pay into performance-driven bonuses.
The Aurora, Ontario-based company has a unique corporate constitution that mandates things like money for research and development to keep the firm competitive, he said. He also said the company's position of sharing equity with management has helped it go from a start-up formed in Stronach's garage in 1957 to a $12.9 billion company.
He did not directly address the $31.5 million payment, and company officials did not elaborate.
``The track record speaks for itself,'' he said. ``Magna is committed to being the most transparent, most efficient company in the world.''