Dividend hike, CEO pay questioned at BCE annual meeting following job cuts

02/05/2024

Frustration over BCE Inc.’s 4,800 job cuts earlier this year spilled over at the company’s annual general meeting on Thursday, as investors and employees questioned executives on their compensation during a period of belt-tightening for staff.

But board chair Gordon Nixon and Bell Canada president and CEO Mirko Bibic defended the decision, with the former referring to last year as a “challenging but also very transformational year” for the Montreal-based telecom and media giant.

Bell announced the job cuts in February amid a restructuring plan that saw it sell 45 of its 103 radio stations and close 107 The Source stores. The move drew widespread backlash, including from Prime Minister Justin Trudeau, who specifically called the 440 eliminated media positions at the company a “garbage decision.”

The same day it announced the layoffs, BCE raised its quarterly dividend by three cents per common share, to 99.75 cents per common share.

One question during Thursday’s meeting called on the company’s leadership to explain that decision amid “such a tough economic time,” suggesting there was a disconnect between the thousands of job cuts while BCE reported more than $2.3 billion in annual profits for 2023 and hiked the dividend.

Nixon acknowledged it was a “logical question.”

“Those earnings are large numbers, but as you know, they have not been growing at the rate that we would like as a company in order for our shares to grow and our dividend to grow even at a higher rate,” he said.

“The ability of us as a public company to grow, to invest, to attract capital, to make capital investments, is contingent upon our ability to grow our earnings and to grow our dividend and to perform.”

Bibic added the company eliminated a number of vacant positions as part of the cuts to minimize the effect on current staff and also offered unionized employees a voluntary buyout.

In response to another question about whether the eliminated positions affected only lower tiers of the workforce, Bibic said there were changes “at all levels of the company.”

He said the number of vice-presidents at BCE is down 20 per cent since 2020 and “we are collapsing the executive roles across the company as well.”

“It’s part of the need to become more efficient and that’s applying at all levels of the company,” said the chief executive.

But some took aim at Bibic, himself. One question focused on whether BCE considered lowering his compensation as others lost their jobs.

Bibic’s total compensation for 2023 was $12.4 million, up three per cent compared with 2022, documents circulated to shareholders for the meeting show. The bump was attributed to a $500,000 “long-term incentive award” meant “to continue his compensation progression and to address market competitiveness.”

No changes are planned to Bibic’s target compensation for 2024, according to the documents.

Nixon said BCE is “well-below” its competitors when it comes to CEO pay and executive compensation as a whole. He noted the company determines those figures through advice from a consultant hired to assess performance and the competitive environment.

“It’s a tricky issue during a very difficult period of time,” he said.

“But we think as a board, we’ve done a very good job at our compensation committee in terms of acknowledging both the challenges, as well as the fact that we want to ensure that we maintain the best talent, not just at the CEO level, but at our executive level across the board.”

Unifor, which represents around 19,000 telecommunications workers at BCE and 2,100 members at Bell Media, had urged shareholders in an open letter on Wednesday to pressure the company for answers.

Earlier in the day, BCE reported its first-quarter profit fell compared with a year ago as it faced higher severance, acquisition and other costs related mainly to job cuts.

It also said it faced increased net mark-to-market losses on derivatives, higher interest costs and increased depreciation and amortization expenses.

BCE earned a profit attributable to common shareholders of $402 million or 44 cents per share for the quarter ended March 31. The result compared with a profit of $725 million or 79 cents per share in the same quarter last year.

While Bell said in February that its restructuring plan is expected to save the company $250 million on an annual basis, chief financial officer Curtis Millen told analysts none of that was captured in the first-quarter results.

He said more than half of the total planned layoffs — which Bell initially said would be carried out through the spring — are complete.

“We haven’t seen much of a benefit yet,” said Millen.

“So the estimate on our side is that as we continue to finish that project, we’ll continue to ramp up some cost savings over time.”

Operating revenue totalled $6.01 billion, down from $6.05 billion in the first quarter of 2023. On an adjusted basis, BCE said it earned 72 cents per share in its latest quarter compared with 85 cents per share in the same quarter last year.

Desjardins analyst Jerome Dubreuil said BCE’s results “were slightly ahead of expectations.”

“We are not ready to recommend BCE shares as yet in the absence of a clear plan for future accelerated sustainable organic growth, which we believe would better support the company’s valuation,” he said in a note.

The company added 45,247 net postpaid mobile phone subscribers, up 4.5 per cent from the same period last year, representing its best first-quarter result for the metric since 2018.

It said the increase was driven by population growth, continued demand for 5G and bundled services, effective promotions and stronger performance by its discount carrier Virgin Plus.

BCE’s monthly churn rate for the category — a key metric measuring subscribers who cancelled their service — was 1.21 per cent, up from 0.9 per cent during its previous first quarter.

It said this reflects an increasingly competitive market with more promotional offers, as well as reduced business customer demand.

Bell’s wireless mobile phone average revenue per user was $58.14, down a penny from the first quarter of the prior year.

This report by The Canadian Press was first published May 2, 2024.

Companies in this story: (TSX:BCE)

Sammy Hudes, The Canadian Press