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CEO of MaRS got 22% raise (one month before Ontario wage freeze?), made $533K in 2010

August 3rd, 2011 by Greg Boutin

The salary of MaRS’s CEO was $533,113 in 2010, according to the Ontario government’s public salary disclosure report, which can be seen at http://www.fin.gov.on.ca/en/publications/salarydisclosure/2011/otherp11.html

That’s an increase of 22% over her 2009 salary.

According to a consultant there, who emailed me anonymously: “MARS is covered by the Province’s salary freeze guidelines. They did this by jamming all the increases through a month before the guidelines went into effect in April 2010 (they joke about it).”

Meanwhile a Canadian site like Sprouter.com is shutting down, though it did more to promote Canadian startups (the majority of the startups featured in their popular newsletter were from here) in North America than MaRS ever did.

Beside the CEO, another 20 MaRS employees are listed as making over $100K in the disclosure, compared to 15 in 2009. The total number of full-time employees in 2009 was only fifty one, as per the nonprofit disclosure (number of employees on this page). The public disclosure for 2010 has not been published yet. The second highest salary is that of the Vice President, Real Estate, at $277K per year.

Last week, MaRS announced a real estate expansion that apparently will see it collect a loan of $230 million from the province. Beside the fact that the taxpayer is guaranteeing that loan and possibly subsidizing it (the interest rate was not mentioned), the whole project will cost $344 million and the rest of the funding was not specified. Although described as a public-private partnership, no private contribution has been announced. Public subsidies may cover the difference.

In spite of receiving government funding for virtually all of the capital to acquire the current buildings, and collecting rents from companies, MaRS still requires millions of dollars in subsidies from the province today. As of 2009, the organization had collected over $140M in subsidies, including $9.5M in 2009 (from the nonprofit disclosure, line 4550).

A look at tenants from existing buildings shows a number of large corporations, evidently seeking to benefit from the proximity with the hub. By locating there, new companies also get prime access to all the grants that MaRS administers, over companies who do not.

Most of those grants require working with the hub’s advisors, many of whom also hold private consulting companies on the side.

MaRS’s model is in many ways comparable to the ones at eHealth Ontario’s, Ontario Lottery & Gaming Corporation, or Toronto Community Housing just before they had public scandals: lots of public money flowing in, high salaries for the leadership, little public disclosure or government oversight.

In 2010, I wrote a series of blog post detailing a number of issues with the institution, starting with the excessive salary of the CEO. According to current and former employees, the posts created lots of angst within MaRS senior management. Yet close to no media follow-up. A Financial Post article by Adam McDowell, called “Discovering life at MaRS”, mentioned the criticism in passing, without digging in any of the facts. The article has now been taken down, although strangely other articles published the same day are still up (the Financial Post did not respond to request for comments – Article’s cache is still up for now on Google). Other newspapers never investigated the issue in spite of requests, and last week republished the MaRS press release without raising any question about the financing or the ROI of the operation. Startup North, a popular site for Canadian entrepreneurs, initially criticized the salary of MaRS CEO on Twitter, but backed out of all criticism since then in spite of promising a blog post on the topic. Criticizing doesn’t pay or make it any easier to get invited to MaRS events.

My motivation for writing this? Looking like a crazy conspiracy theorist? No thank you. I’d rather someone else publish this, but I’ve learnt no one else will. I believe in transparency, and as a Liberal at heart I believe the party would fare better with better oversight. As a Canadian, I believe the same is true for our country. I do not benefit financially from it, far from it: my Canadian revenue today is less than 25% what it was before publishing my posts, with a lot of people distancing themselves to not be associated with a MaRS critic. But the money we make is not a perfect indicator of our worth as individual. Right Mrs. CEO?

 

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  • Bob Huggins

    Really? How useful is this? As an entrepreneur and an advisor to one of the 14 Regional Innovation Centres in Ontario, I , like many of my colleagues have chosen to give my time and lessons learned back to entrepreneurs. We do this below market rates and are more interested in helping start ups grow scaleable businesses in Canada, rather than worrying about the motivation of provincial salary levels.

    As a person who created technology from a germ of an idea to an exit with Google, I have no problem in assuring you that local entrepreneurs benefit from my business experiences (without the painful scars).

    If your motivation is to sincerely help entrepreneurs flourish, then please put your energies in that positive direction. Otherwise this space in C100 is not reserved for conspiracy theorists. Elvis is dead.

    Bob Huggins
    Chief Marketing Officer in Residence
    RIC – Ottawa

  • http://growthtimes.com gregboutin

    Hi Bob, you’re entitled to your opinion, which incidentally, defends your source of revenue. My claims, on the other hand, negatively impact my revenue.

    While my main issue here is with the indecent level of compensation of MaRS CEO, let’s talk again about advisors (and see my post last year for full analysis).

    I don’t doubt that entrepreneurs can benefit from the advice and introductions of advisors like you (keep in mind I worked with MaRS and RIC advisors for close to a year), but the only good measure is ROI. Given that MaRS does not publish any data on ROI, beside the incidental “such MaRS client raised money” or “we helped X entrepreneurs and had Y meetings”, which may have nothing to do with MaRS, the only part we have public data about is cost. And I have commented on that.

    To shine some more light on the cost side still, I would invite you to share the actual amounts of your “below market rates”, so I can comment. I also advise plenty of entrepreneurs for free both here and through the Stanford alumni network and I do that gratis – not for any “below market rate”. In those Internet days, advice is worth very little anyway, and introductions can be obtained relatively easily.

    What entrepreneurs pay me for is generally getting stuff done. If they don’t like what they get, they don’t hire me. There is no distortion, it’s not tied to grants, and I don’t get clients referred by colleagues to my private practice. So far I have had a steady stream, with contracts renewed in over 75% of cases. So I must assume they see the value. That, Bob, is a much more direct measure of ROI at the end of the day.

    As for conspiracy theories, I invite you to check the definition. It tends to be based on unverifiable claims. Mine are.

  • http://growthtimes.com gregboutin

    And of course I’d welcome your justification for the salary level of MaRS CEO, over twice that of the prime minister and MPs, when she’s managing 51 people. As well as the sources of private financing for that shiny new building to be set up in Toronto.

  • http://growthtimes.com gregboutin

    Edifying that the most decent reporting on this has to be done by the Sun. http://www.torontosun.com/2011/08/02/salaries-increase-at-mars-discovery-district
    I love how all the justifications is “we got new funding from the government for more buildings, so of course we are successful”. As for the number of clients going up, that is evidently a function of the definition of “client”: have one meeting with an advisor at MaRS and you’re a client. Note, as usual, no performance metrics. It’s all about inputs.
    C’mon Ontarians please don’t let them prove you’re that cynic about public spending! That’s why they can get away with it.

  • Michael Paduch

    Greg, the quoted CEO salary level is not excessive. The optics behind the last minute raise is indeed uncomfortable, the government should not allow for that because it indicates some form of deceit and while legal, the public’s perception can easily turn negative towards such moves but it is not an illegal action per se. The staff can laugh or be cynical about it, and that’s alright with me.

    As for the ROI, the value is in the eyes of the beholder. There could be a different perception of the value of MaRS to an average tax payer versus to an average recipient of its services. You seem to reflect only the position of the tax payer but asking for the government institution to be as efficient as its private sector counterpart is a double-edge sword and we don’t want to go there in this debate as the conclusions might surprise us..,

    Besides that, applying the ROI approach to a public institution (department, agency etc.) is not a wise move because these institutions by definition are not there to generate positive returns on investment but to fulfil a political function. For example, they might be set up to create an impression that the government of the day is doing something useful and important in one particular area. It is hard for us the private sector folks to understand and agree with such defined functions of taxpayer funded institutions but that is how politics is played in most systems of governance, democratic or not. I would look at the mandate of the organization and whether this mandate is being fulfilled. I would then look at the laws governing the organization’s operations. If, for example, someone is willingly bililng for expenses they are not entitled to be reimbursed for, that’s a financial fraud. But if someone is not efficient in delivering on its mandate, then a political pressure is needed to fix the problem but you can’t refer to ROI as if this was a for-profit, private entity, that just won’t cut it. Perhaps that’s why the press is not interested in reporting on it; there is simply no teeth in those allegations.

    Michael Paduch

    • http://growthtimes.com gregboutin

      Michael, I see you consult through Sophic Technologies Inc and co-founded Canadian Health Systems. Can you please clarify if you consult on behalf of MaRS, OCRI, or any of the other public hubs? Or collected any grant / incentive from them.

      For the rest, it’s your opinion against my facts. MaRS CEO’s salary is twice the PM and MP’s average salaries – and one of the highest public sector salaries in Ontario. She manages 51 people. Please show me some benchmarks about your claim that it is not excessive. I have provided my benchmarks showing the salary is grotesque.

      MaRS delivers services the private sector would deliver better (at a lower cost, and without favouring onsite tenants). I believe I have proved it a number of times to a number of companies. Of course, that excludes providing grants to my clients, which MaRS advisors are much better at doing than me… although in my experience that helps very few of them to survive in the end. But we don’t know, there is no reporting.

      If MaRS is a public service, then let’s make it a formal government agency, and deliver only public functions like attracting local investments, administering fair incentive programs (with actual oversight, e.g. what’s the outlay-to-administration ratio?), organizing public forums (all those functions were already caried outby other agencies with more oversight though…) We’ll avoid the future scandal a la eHealth, Ontario Lottery, and Toronto Housing Corp.

      Note the Sun now reported on it too, now. The reason that doesn’t make it as a headline is simply because no one knows about MaRS, so papers would have some education to do first. The other reason is that indeed, it is quite small compared to some other government issues. Does not mean it does not matter.

      As for the assertion that taxpayers should simply trust the government is spending the money wisely… please. Non-recipients of the money, like many of my friends starting companies (or startups closing, e.g. Sprouter), are as important as handpicked recipients agreeing to play into that circus. I don’t believe in an enlightened aristocracy guiding us through the night.

      • Michael Paduch

        Hello Greg, first things first: I have not had any business dealings with MaRS, OCRI or other technology hubs. I invested my own and my partner’s monies, and raised private funds from a group of private investors to develop a product before we sold the business. The only government reimbursement for our R&D effort came from CRA through the SRED tax credit. That should clear the potential conflict of interest position I assume you were concerned about.

        As to why a PM’s salary is a comparison benchmark is unclear to me. I believe Supreme Court judges are better compensated than the Prime Minister and even then their compensation is low compared to what a CEO of a food retailer or a partner a major law firm make. I really don’t see a connection. 51 direct reports is one part of the equation; the assets under management is another dimension.

        There are complex factors that weigh in when determining executive compensation, it is not as simple as comparing it against the compensation of an arbitrary political leader. So the assertion that the stated salary is “grotesque” may not hold although I do realize many people, especially early on in their careers, will find the amount to be high or very high.

        Now, I am not sure where I implied that the public should blindly trust some “enlightened aristocracy” to run the public “through the night”. It sounds a bit like quoting from Leon Trotsky’s speeches ;)

        If I were you, I would follow the democratic path: I would simply write a letter to my provincial member of parliament perhaps with a follow up to a provincial auditor outlining the key concerns in factual, dispassionate way. Having some signatures from individuals who feel equally strong about the alleged misdeeds at the agency would help make your case stronger.

        While blogs are a useful mechanism for communicating thoughts of public concern, they do not require elected officials to act. A direct letter to a member of the parliament becomes an official record one cannot easily ignore (ignoring a letter from a constituent is admission of a decision not to act, which in itself may have political consequences later on).

        All the best!
        Michael

        • http://growthtimes.com gregboutin

          Michael, I am glad to see you had no dealings with MaRS and OCRI. Turning the argument on its head, that’s probably why you still think MaRS CEO deserves her salary.

          Regarding benchmarks, let me try to please you by using your variables: the head of the CBC makes about half what the CEO of MaRS makes, while managing about 5,000 people and assets many times what MaRS manages. And most of other heads of public bodies also make much less, while managing more people and more assets. Just take a look at the Sunrise report – it doesn’t seem you have.

          What would really be off would be comparing the salary of MaRS CEO to that, say, of a CEO of a food retailer or a partner a major law firm. Oh, wait, that’s what you did. Now I’ll have to understand how that works, because generally speaking those people get decades of experience and success before moving into those roles, and respond to actual customers, not the taxpayers. Now in MaRS’s case, the CEO comes from a failed VC fund and basically has no entrepreneurial success behind her. She’s married to the head of UofT who incidentally was also the chair of the medicine department at UofT when MaRS was created (with extensive help from, guess who… UofT!). In fact, applying MaRS’s own recruiting criteria, she would not have been hired. Additionally, she does get paid by us, not any customers, and her salary has no relationship to her performance. In those situations, one sets the salary at the lowest point possible to get the right person in the job. Ask around and you’ll see that you could easily find someone like that for less than $250-300K.

          Your suggestion about following the democratic process is interesting and certainly does not preclude spreading the word. You’ll be happy to know that, along with others, I already wrote to my MPP, as well relevant ministries, and the matter was of no interest to them as they do not concern enough people and there is no process to manage salaries at crown corporations and publicly-funded nonprofits. Which brings us back to MaRS being an unknown brand locally. So now I am trying to make sure it gets known.

  • http://www.twitter.com/luclalande Luc Lalande

    Hi Greg, this is not surprising at all but it is merely a symptom of a much greater issue related to the current Ontario government’s wasteful interventions in a host of policy areas, particularly in the area of innovation, science and technology. With respect to MaRS, I had given the idea a benefit of doubt when it was first proposed and then launched with significant private sector cash support. Today, however, I will simply say this. With the extraordinary, yes extraordinary, level of taxpayer dollars subsidizing the operational and capital requirements of MaRS, I expect nothing less than “extraordinary” results. On that level, I remain unconvinced.

    MaRS will, alas, be compelled to play the “collect the accolades” game where they will appropriate some (and sometimes all) of the credit for any company or research commercialization success story irrespective of the actual level of interaction with any people, program or service offered by it. Most media will cover these success stories as spun further reinforcing the public impression that these agencies are effective in their mandates.

    I commend you for having sacrificed time, effort and risk in looking “under the hood” of the MaRS story and telling that story in an open and transparent fashion.

    Luc Lalande

    • http://growthtimes.com gregboutin

      Thanks a lot Luc. Much, much appreciated. All the more since you are one of the very few out there who doesn’t shy from putting down his real name next to his words. My turn to commend you for it.

    • http://growthtimes.com gregboutin

      One small question. You mentioned MaRS was “then launched with significant private sector cash support”. According to the reported numbers I saw and discussed here, it looks like very little private support has actually been given to MaRS. Do you have more information on that? And do you know who provided support, how (donation, loans?) and for what in return? Of course my working hypothesis is banks and law offices providing support to get prime access to MaRS tenants and the grant money administered by the institution. Would be good to know…

      • http://www.twitter.com/luclalande Luc Lalande

        Over a decade ago a powerful group led by Dr. John Evans rallied in excess of $12 million to pursue a project to transform a piece of real estate across the U of T to a hub of life sciences research, discovery and commercialization. Back then, an investor’s booklet was circulated giving a compelling case for purchasing the land that would eventually serve as the base for the MaRS initiative. Interestingly, the MaRS backers, and I quote from an article in Research Money (April 23, 2001), “stress that the project is private sector driven and its development will largely rely on private sector investment, but public funding of life science research and business incubator support represents an integral part of the vision.” The level of initial private sector financial commitment at that time was unprecedented and eventually led to a cascade of public funds that continue unabated to this day.

        • http://growthtimes.com gregboutin

          Very interesting. I wonder who the initial backers were. In any case, $12M in private funds for a real estate operation is hardly “unprecedented”, and yes, it looks like the initial vision has been supplanted by people seeking self-enrichment on the back of the Ontario taxpayer.

        • http://growthtimes.com gregboutin

          Very interesting. I wonder who the initial backers were. In any case, $12M in private funds for a real estate operation is hardly “unprecedented”, and yes, it looks like the initial vision has been supplanted by people seeking self-enrichment on the back of the Ontario taxpayer.

  • Tony

    Greg and Luc are both admirable for publicizing opinions that will not be appreciated around the watercoolers of public power. I concur with most of their observations and point out that the course of MaRS and its impact on the likes of OCRI (pace Bob Huggins) was well adumbrated in SCAN (at http://bit.ly/loX1oj).

  • http://thephotovoltaic.com/ Lucian

    This is why socialism failed. If you keep giving money to companies to “save jobs” they will relax and will never try to find new markets, or to reduce production costs.

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