Corus has more than $1-billion in debt due for repayment between now and 2030 and has laid off more than 800 employees in 2024.Tijana Martin/The Canadian Press
As Corus Entertainment Inc. CJR-B-T struggled this year to keep itself out of insolvency proceedings and laid off more than 800 people, the company paid $1.8-million in bonuses to five top executives, largely based on hitting targets for cash flow.
Corus paid cash bonuses of $555,401 and $438,868, respectively, to co-chief executive officers John Gossling and Troy Reeb for their performance in its fiscal year ended Aug. 31. Jennifer Lee, an executive vice-president and the company’s chief legal officer, received $221,732.
Heather Shaw, the executive chair and a member of the Shaw family, who control Corus through a voting trust, received a $227,916 bonus on top of $390,000 in salary. The company said that, effective last March 1, Ms. Shaw voluntarily reduced her annual base salary to $155,000, from $625,000, and dropped out of the annual bonus plan. Ms. Shaw’s total fiscal 2024 compensation of $585,916 compares with $2.41-million in fiscal 2023 and $2.92-million the year before.
The company also paid a $366,670 bonus to Gregory McLelland, the former executive vice-president and chief revenue officer, who left Aug. 31 when Corus eliminated his position.
Doug Murphy, the former CEO who left June 17, received $3.85-million in severance pay, Corus said. That brought his total compensation to $4.63-million.
The total compensation for the four current executives, plus the two departed ones, was just under $13-million. The company’s current market capitalization is about $19-million.
Corus disclosed the compensation in its annual proxy statement to shareholders.
Corus shares fell 90 per cent over the course of the fiscal year, to 14 cents at the end of August, as investors feared for Corus’s ability to remain solvent. The stock closed at 9 cents Wednesday.
The company has more than $1-billion in debt due for repayment between now and 2030. Since early September, Corus has received two extensions from its bank group – which is led by Royal Bank of Canada and Toronto-Dominion Bank – to avoid default.
Since the start of 2024, Corus has cut more than 800 jobs, representing roughly 25 per cent of its work force, mostly from Global News at television stations it owns across the country. In July, Corus warned that its debt issues “may cast significant doubt about the company’s ability to continue as a going concern,” as Corus was on track to exceed its maximum debt to earnings before interest depreciation and amortization (EBITDA) ratio of 4.25; meaning total debt could not exceed 4.25 times the company’s annual operating income.
That ratio was increased to 4.75 in September, and in mid-October, the company won another extension from its lenders, allowing Corus to carry as much as $7.25 in debt for every dollar in annual operating income through the end of March, 2025. However, Mr. Gossling told analysts on an Oct. 25 conference call that the company’s financial situation was unlikely to improve before that deadline.
“At this point, I think it is a bit unknown just in terms of what will happen between now and the end of March,” Mr. Gossling said. “If the revenue continues on the path that it is on it is going to be very difficult. Again, it is hard to say exactly where this all goes, but the current shape of the balance sheet is likely not going to be sustainable.”
Corus bases 80 per cent of its annual bonuses on three financial metrics, with “individual business performance objectives” and “individual people and culture performance objectives” making up the remaining 20 per cent. “Managing employee engagement, turnover and retention” is one of the people and performance culture objectives.
If the company decides it greatly exceeded a financial goal or if executives outperformed expectations, those portions of the bonus can be paid at more than 100 per cent of their target. That is what happened at Corus.
The company missed financial goals for profits and revenue, and paid out zero as a result. But Corus said it greatly exceeded a goal for free cash flow, generally defined as cash flow from operations minus cash used for investing in the company. Corus set a goal of $91.1-million but recorded $112.8-million in free cash flow.
As a result, Corus paid out the free-cash-flow component of the bonus at 200 per cent of target.
In addition, Corus said Mr. Gossling, Mr. Reeb and Ms. Lee achieved 125 per cent of their targets for both individual performance metrics. Ms. Shaw and Mr. McLelland scored at 100 per cent.
The free-cash-flow number, coupled with the board of directors’ evaluation of individual performance, allowed the five executives to receive between 73 per cent and 78 per cent of their target bonuses for the year.
Mr. Gossling received total compensation of $2.03-million, versus $2.16-million in fiscal 2023, while Mr. Reeb received $3.18-million, up from $932,625 the previous year, when he served the company’s executive vice-president, broadcast networks. Ms. Lee received $1.01-million, up from $936,000 in fiscal 2023. Mr. McLelland made just under $1.5-million, up from $1.25-million the year before. Corus did not disclose any severance for Mr. McLelland.
For all four executives, a significant component of their pay was a non-cash estimate of the future increase to the values of their pensions, which will be paid after retirement. Corus estimated the increase to Mr. Reeb’s total lifetime pension benefit to be $2.12-million, or nearly two-thirds of his reported pay.
Corus did not make any stock or option awards in fiscal 2024, after awarding just under $6-million worth to the six executives the year before. Those fiscal 2023 awards, which have decreased in value, will likely be worthless if Corus files for insolvency protection.
In broadly discussing its pay decisions for fiscal 2024, Corus said it achieved a number of goals related to five “strategic pillars.” The company also highlighted multiple successful renegotiations of its credit agreements.
Corus added that “management also furthered considerable efforts to right-size the Company for a more sustainable future, achieving stated targets related to headcount reductions by the end of the fiscal year.”
Editor’s note: A previous version of this article incorrectly stated that Corus Entertainment Inc. co-chief executive officer Troy Reeb formerly served as the company’s chief financial officer. It is co-chief executive officer John Gossling who served as CFO and continues to hold the position. Mr. Reeb had been the company’s executive vice-president, broadcast networks. This version has been updated.