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The chief executive of AbitibiBowater Inc. is declining his incentive compensation of $1.7 million U.S. this year in an act of good faith as he reaches out to employees and communities for help in cost-cutting efforts at the forestry giant’s Quebec operations.
“I wanted to be clear to those with whom I interact that my number one goal is the long-term success of this company and I am prepared to put my personal compensation on the table to make my point,” AbitibiBowater CEO Richard Garneau said on a conference call to discuss third-quarter results Monday.
He singled out plans by the Quebec government to reduce Montreal-based AbitibiBowater’s harvesting rights by 11 percent as of April 1, 2013, in addition to the 18 percent that was cut in 2008.
The newsprint and pulp-and-paper giant has to engage in a “constructive dialogue” with employees and the communities in which it operates mills in order to deal with the challenge posed by the harvest rights reduction, he said in an interview.
The cuts mean AbitibiBowater will have less wood supply to sell to third parties, and that will mean less capacity at some of its sawmills in Quebec, which in turn could result in layoffs, he said.
Taking a pass on his incentive compensation ensures he won’t be a target for critics who might point to his pay package and cry foul as the company seeks further cost-cutting measures, said Garneau, who took over last year after financially troubled AbitibiBowater emerged from 20 months of court-supervised restructuring.
Other company executives at the company have accepted their compensation awards, a move that reflects the need to continue to attract and retain top talent in the industry, Garneau said on the call.
He lashed out at some critics who blasted executive pay at the company earlier this year, calling the criticism “misguided and short-sighted.”
The comments came after Montreal-based AbitibiBowater reported profit of $52 million or 53 cents per share on revenue of $1.2 billion. Adjusted for extraordinary items, the company reported a loss of $44 million or 46 cents per share.
Next week, the company’s name will change to Resolute Forest Products.