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Under Schedule 1 of the priorities act, “constraints are placed on the compensation for the directors, chief executive officer and executives of Hydro One and its subsidiaries.” Hydro One is also required annually to “make public the salaries paid to certain executives.” (The current requirement is only that the salaries of the top five executives be disclosed.)

As well, the new government is planning to amend the Ontario Energy Board Act to provide that the rates charged by Hydro One “shall not reflect amounts paid for executive compensation.” And as a further sign that the government is fully in change, it has granted itself “immunity from litigation arising from this legislation.”

“It’s extraordinary,” noted another senior banker, “for a government to include a provision in the Act where it cannot be sued by shareholders.

Accordingly, the government will not only limit what Hydro One can pay its executives, which could reduce the company’s ability to attract talent, but it will also the limit its ability to pass on compensation costs through its rate base, a plan that will affect its revenue. As well, when Hydro One does develop a new compensation plan (in which compensation will definitely be lower), the Management Board of Cabinet has the final say.

If nothing else, the changes represent a massive encroachment into the affairs of a publicly listed company that has raised equity capital from the market at least three times.