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.

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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.