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Welfare to work CEO got million dollar raise

The CEO of an American company that provides job placement services to British Columbia welfare recipients got a $1 million pay raise in 2008.

An April 21 story in the Phoenix Business Journal said Providence Service Corporation's Fletcher McCusker saw his total compensation in United States dollars go from $890,954 in 2007 to $1.82 million in 2008.

The compensation includes McCusker's base salary, stock awards, options, incentive pay, insurance and retirement benefits, the Journal reported, citing documents filed with the U.S. Securities and Exchange Commission.

In 2007 Providence Service Corp. bought Victoria company WCG International Consultants Ltd. which runs the JobWave BC program. WCG holds contracts with the provincial Housing and Social Development Ministry's B.C. Employment Program aimed at placing welfare recipients in jobs.

A single person on welfare in B.C. who is classified as “expected to work” receives $610 a month, or $7,320 a year.

The B.C. contracts were worth about four percent of Providence's total revenues of $692 million in 2008.

Providence's annual report, dated March 30, 2009 and filed with the SEC, includes a couple notes related to the purchase of WCG. Company officials believe it will not be required to pay $10.8 million Canadian under an “earn out provision” to former WCG owners including Ian Ferguson, Darlene Bailey, James Rae, John Parker and Robert Skene.

The payment, on top of the $10.1 million in cash and $7.8 million worth of shares Providence already paid for WCG, depended on WCG's financial performance between August 1, 2007 and December 31, 2008. “We have determined that the financial performance of WCG during the earn out period did not meet the requirements of the earn out provision,” said the report. “Accordingly, we believe we are not obligated to make an earn out payment to the sellers.”

The report also notes that in 2008 B.C. “took steps to strictly enforce” parts of the contract including how much it would pay per client. Those steps cost Providence about $3 million, which the company is disputing with the provincial government, it said.

B.C. also canceled a WCG contract in the Interior of the province worth roughly $8 million, Providence's annual report said. That too is going to arbitration.

B.C. finance ministry audits show WCG and other employment contractors received over payments in the past, The Tyee reported today. The company's former vice president responsible for government relations and communications, Robin Adair, is now a B.C. Liberal Party candidate in Saanich South.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.

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