The Caisse de dépôt et placement du Québec tables its 2007 annual report

The 2007 Annual Report of the Caisse de dépôt et placement du Québec, tabled today in the National Assembly by Minister of Finance Monique Jérôme-Forget is now available on the Caisse website (www.cdpq.com).

For the Caisse, publication of the Annual Report is the ideal moment to report on governance, financial performance and its contribution to the economic development of Québec. The 2007 Annual Report also presents an analysis of the Caisse’s financial position and performance, and details the holdings and changes in position of its 18 specialized investment portfolios. The 228 page document also reports on the organization’s operating leverage.

“The weighted average return on depositors' funds was 5.6% in 2007, which places the Caisse in the first decile within the comparative universe of Canada’s major pension funds. For the 3-year period, the Caisse posted an annual return of 11.5%, which is also within the first decile. And for the 5-year period, the annual return was 12.4%, which positions the Caisse within the top 5% of its comparative universe,” stated Caisse President and Chief Executive Officer, Henri-Paul Rousseau.

Contribution to economic development
This year, the Annual Report also gives a more detailed accounting of the Caisse's contribution to the economic development of Québec. In this area, the Caisse is one of the largest investors in Québec, with total assets of $37.8 billion, which makes it a major creator of wealth for its depositors, and for Quebecers in general.

“The returns obtained by the Caisse remain its primary contribution to Québec’s economic development. Over the last five years, the Caisse has generated net investment income of $63.1 billion, including $7.9 billion in 2007. And during the same period, depositors’ net assets doubled, growing from $77.7 billion to $155.4 billion. The report on economic development also demonstrates that the Caisse invests $13.2 billion more in Québec than what would be expected from the indices that underlie the depositors’ investment policies. It’s clear that Québec is an important part of the Caisse’s portfolios,” Mr. Rousseau declared.
 
Caisse assets in Québec companies as at December 31, 2007 totalled $23.4 billion invested in private equity ($6.0 billion), market securities ($2.4 billion), fixed-income securities ($8.1 billion) and real estate ($6.9 billion). And during the period, the Caisse still held one of the largest stock portfolios of Québec publicly traded companies, representing investments of $3.7 billion, including $1.3 billion held through the Private Equity group. Moreover, from 2002 to 2006, the Caisse’s assets in Québec businesses increased annually by 9.8%, much higher growth than the 4% of the Québec economy. In 2007, asset growth in businesses reached 12.5%.

Compensation program
The 2007 Annual Report also presents the Caisse’s human resources management and compensation policies. In addition, it provides a statement on the compensation of the President and Chief Executive Officer and the five most highly remunerated officers reporting directly to him.

As it is the case in the investment industry, variable compensation is the most important element in the remuneration of the Caisse’s officers and portfolio managers. This type of policy allows for greater alignment with the depositors’ interests and represents an additional employee retention incentive.

As noted above, the Caisse recorded superior performance during the past years. On the three-year basis, the Caisse generated net investment income of $40.8 billion and value added of $2.2 billion. For the four-year period, used to calculate the long-term bonus, net investment income totalled $51.6 billion and value added $2.8 billion.

In 2007, the Caisse paid a total of $40.7 million in annual and long-term bonuses to all of its employees, or essentially the same amount as last year. The annual bonus program is based on performance over the previous three years while the long-term variable compensation program is based on the average performance over five years. The long-term incentive program, which provides for payments starting from the third year, is now in its fourth year.

“Compensation is a strategic issue for the Caisse. It has been perceived as Québec’s investment school for too long. Over the years, it lost talented employees recruited by firms that offered more advantageous compensation conditions. To contain this trend, the Caisse has implemented a more competitive total remuneration program. A significant portion of the program is variable compensation based on results,” explained Caisse Chairman of the Board Pierre Brunet, who also heads the organization’s Human Resources Committee.

The Caisse de dépôt et placement du Québec is a financial institution that manages funds primarily for public and private pension and insurance plans. As at December 31, 2007, it held $155.4 billion of net assets. One of the leading institutional fund managers in Canada, the Caisse invests in the main financial markets as well as in private equity and real estate. For more information: www.cdpq.com.