The current anger and outrage by ordinary New Brunswickers over salary increases to NB Power CEO David Hay is understandable and should serve as a reminder to governments and boards to consider their actions before rubber-stamping big bonuses, industry analysts said yesterday.

“The average person on the street who is working and paying taxes and their power bills is not making that kind of money and they get up in arms,” said Charles Cirtwill of Halifax, executive president of the Atlantic Institute for Market Studies in Halifax.

“It shows that the government has to find a way to set these types of salaries so they are as fair as possible.”

NB Power’s board of directors recently agreed to increase Hay’s salary to about $400,000 per year and throw in performance bonuses of over $100,000.

The announcement has caused a stir in the Legislature and angered regular folks who say the Graham government should do more to control spending, especially at a time when many people can’t afford to pay their power bills.

According to Statistics Canada, the average worker in New Brunswick makes about $17 per hour which translates into about $35,000 per year before taxes. The national average is about $19 per hour.

Gerald Walsh, a workplace analyst who operates an executive placement business in Halifax, said boards of directors who are responsible for hiring high-level executives, face a difficult task. He compared top-level CEOs to professional athletes whose salary levels are often driven by competition, demand and the going rate on the market. But when those salaries are paid by public funds or revenue generated by rising utility rates, people tend to get angry.

“It happens everywhere, and it highlights the growing responsibility of boards to ensure that packages are competitive but also reasonable for the situation.”

But what is reasonable, competitive or comparable to New Brunswick?

Cirtwell and Walsh both declined to comment on Hay’s specific situation, but noted that in tough economic times, it is often a good idea for a CEO to take a pay cut or reduction as a sign of good faith and leadership. Walsh said taking a pay cut can often act as a symbolic gesture by a CEO that he or she is trying to help while others are suffering because of a downturn in the economy.

For example, it was announced last month that Rob Bennett, the president of Nova Scotia Power, would be taking a pay cut after the Nova Scotia Utility and Review Board started to pay attention to the outrage expressed by customers over the salaries of executives. Although Bennett’s salary wasn’t disclosed, it was said to be lower than that $770,000 paid to his predecessor, Ralph Tedesco. The board cut the CEO’s salary just before a rate increase that takes effect in Nova Scotia on Jan. 1.

NB Power is a major corporation with more than 2,500 employees. It produces electricity for use both in this province and for export. The corporation purchases about $140 million worth of goods and services a year and pays close to $55 million a year in provincial taxes.

Hay has been CEO of NB Power since 2004 and has been recognized with several awards for his business excellence. Before coming to NB Power, he served as managing director of Delgatie Inc., a financial services and advisory firm. He also served as managing director of Merrill Lynch in Toronto and London.

Perhaps one of the most famous bosses to agree to a pay cut was Bill Ford Jr., a descendant of Henry Ford. When he took over the automaker in 2005, he said he would do it for free until the company started showing a profit. It is expected he might start paying himself again sometime in 2009. In March of this year Ford Motor Co. gave all employees in the U.S. and Canada a $1,000 bonus even though the company lost $2.7 billion.

Cirtwell said a bigger issue is the wage disparity between government workers and employees in the private sector.

A comparison report of public sector and private sector wages recently released by the Canadian Federation of Independent Businesses indicated that government and public sector employees are paid roughly eight to 17 per cent more than similarly employed individuals in the private sector.

“In addition, taking into account significantly higher paid benefits and shorter work weeks, the public sector total compensation advantage balloons past 30 per cent. Expressed in dollar terms, public sector employers have a combined wage and benefits bill that is $19 billion higher than if they had kept costs to private sector norms,” the report said.

The report said the federal government is the worst offender, with a wage and salary premiums of 17.3 per cent. Premiums paid by municipal governments are 11.2 per cent higher. Provincial governments pay about 7.9 per cent more than similar jobs in the private sector.

Andreea Bourgeois, New Brunswick director of the CFIB, says the numbers indicate that when you factor in health insurance plans, shorter work weeks, holidays, personal leave days and other benefits enjoyed by workers in the public service, they are actually about 30 per cent better off than people in the private sector with similar jobs and experience.

“There is no accountability for these packages and as people keep going up the ladder, the packages get more generous.”