Major Projects Office rankles Bay Street with recruitment, compensation demands for junior staff

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Ottawa’s newly created Major Projects Office is hunting for staff on Bay Street, and its requests to borrow, or second, top talent at the junior and mid-career levels are fuelling some anger, particularly over compensation, according to six sources.

To some, the MPO’s requests for staff have come across as directives, putting business leaders and bankers in awkward positions because these asks ultimately trace back to Prime Minister Mark Carney, who made the MPO a signature initiative of his first year in office.

The MPO has also asked private-sector sponsors to consider topping up pay for the employees that they loan to the government, two of the sources say. Although financial arrangements of this sort can make sense on paper – a vice-president from investment banking, for instance, will likely be out hundreds of thousands of dollars a year working for the government relative to their current job – having a company top up the pay of a government employee is an ethical quagmire.

The Globe and Mail is not naming the six sources, who are spread across capital markets, banking and S&P/TSX 60 corporations, because they are not authorized to speak publicly.

Natural Resources Minster Tim Hodgson said people are stepping up to join the MPO to serve their country.

“The major projects office is a really important part of our strategy,” he told reporters Thursday. “Getting the best and brightest in Canada to work on delivering these projects is really important.”

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The MPO, established in August, is responsible for the regulatory fast-tracking of large energy, mining and infrastructure investments under Bill C-5, which allows projects to bypass normal legal requirements if deemed by Ottawa to be in the national interest. The MPO was created to reduce Canada’s economic reliance on the United States, amid a trade war launched by President Donald Trump.

Since its founding, the MPO has hired former TransAlta Corp. chief executive officer Dawn Farrell as its CEO, and she has spent the past three months hiring senior-ranking staff. Recent additions include chief investment officer Kelsen Vallee, a former investment banker at CIBC World Markets; electricity division head Michelle Chislett, a former executive at Northland Power Inc.; and vice-president Rob Van Walleghem, the chief legal and Indigenous affairs officer at Trans Mountain.

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The recent federal budget allotted $214-million to the MPO over five years, providing funds to fill its ranks.

But it is proving easier to find retired or late-career bankers, corporate lawyers and executives. Many are already wealthy and are happy to give back. Hiring junior and mid-career staff is a much different game, the sources say.

To start, younger hires are at a different point in their lives, and they risk falling off their internal promotion tracks. Because they would be lent to the government, their jobs would likely be guaranteed when they finish with the MPO, but they may have to return to an old role, and Canadian companies have not historically valued government experience when promoting.

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In the U.S., meanwhile, secondments or new jobs at high-profile public offices, such as that of a district attorney, can advance a career.

The pay cut that younger staffers take also hits differently. Even though the MPO’s seasoned hires are also earning less relative to the private sector – Ms. Farrell is making between $577,000 and $679,000 annually over a four-year term, after making $6.7-million in 2020 during her last full year running TransAlta – younger staff may be saving for their first homes, or paying $3,500 a month in rent in downtown Toronto.

Aware of this difference, the government has asked companies to consider topping up pay while their employees work for the MPO. However, the idea can be an ethical minefield. Banks that second their staff may end up advising on the very deals the MPO is working on, and energy and mining companies who lend employees may develop the projects that are being considered by the MPO.

At the same time, several government employees have joined the MPO – at a recent committee hearing, Mr. Hodgson said four staffers from Natural Resources Canada have moved over – and they would make significantly less than colleagues topped up by the private sector.

Carney’s major projects, mapped

Because the issue is so fraught, some companies are thinking through different ways to compensate the employees they loan other than direct top-ups, according to four of the sources. One idea being batted around is having the seconded employees earn government rates while with the MPO, but then offering outsized bonuses when they return to their sponsors.

There are no easy answers, however. Mid-career employees tend to start earning share-based awards as part of their compensation. Lately, bank shares have been on a tear, and employees who missed out on two or three years of these share grants could lose out on their rise in value. Their company may be willing to make up for it with the size of their bonus upon return, but that’s a big if.

However, money and career advancement aren’t the only variables involved. Working for the MPO is portrayed as an act of service for the country, and it’s possible those who join get a taste of the public sector and realize they like it.

The biggest champion of this idea might just be Mark Carney himself, who left Goldman Sachs for a role at the Bank of Canada – and ended up being prime minister.

With reports from Stephanie Levitz

This article has been updated to add a statement from Tim Hodgson, the federal Minister of Energy and Natural Resources, which was not available at the time of publication.