Steel City's Pain: Algoma CEO's $6.8M Exit Sparks Outrage and Scrutiny

SAULT STE. MARIE, ON – June 17, 2026 – In the world of corporate turnarounds, the numbers often tell a brutal story. For Algoma Steel, the story of 2025 is one of stark, almost unbelievable, contrast. It is a story of a nearly $1 billion loss, of 1,000 jobs vanishing from a community that depends on them, and of a retiring chief executive whose compensation increased by 22% to a staggering $6.82 million.

This week, the United Steelworkers union (USW) cast a harsh spotlight on this disparity, releasing a statement that labeled the compensation for former CEO Michael Garcia “egregious.” The union, which represents the majority of Algoma’s workforce, highlighted the “brutally callous timing” of the layoff announcement in December 2025, just days before Christmas, which devastated Sault Ste. Marie’s largest employer.

“It is outrageous to attempt to justify a CEO’s 130% compensation increase over two years, while hundreds of workers have lost their livelihoods,” stated Marty Warren, USW National Director for Canada. The union’s condemnation has ignited a fierce debate, forcing a closer look at the decisions made in the boardroom and their profound consequences on the factory floor and in the community.

A Tale of Two Ledgers

The chasm between executive reward and company performance is rarely drawn in such sharp relief. As Mr. Garcia prepared for his December 31, 2025, retirement, his total compensation package swelled to $6.82 million, a significant jump from the $5.58 million he received in 2024 and a 130% surge from his $2.96 million package just two years prior. His 2025 earnings included a base salary of $1.07 million, translating to a bi-weekly paycheque of over $41,000—more than many Canadians earn in a year.

Juxtapose this with Algoma’s own financial statements for the fiscal year ending in December 2025. The company reported a staggering net loss of $985 million, a dramatic downturn from a $139 million loss the previous year. Revenue fell by 15% to $2.08 billion, and steel shipments plunged by 14%. The company cited an “extraordinarily challenging operating environment,” pointing to severe trade disruptions as a primary cause.

In its executive compensation disclosure, Algoma’s board of directors offered a startling piece of context: the $6.82 million payout was actually less than what Garcia could have received. The board stated that the terms agreed upon were “materially lower than those to which he would have otherwise been entitled under the termination without cause provisions of his employment agreement.” This defense, suggesting a negotiated discount on a contractual obligation, has done little to quell the public and union outcry, which questions the very structure of an agreement that rewards a leader so handsomely amidst corporate collapse.

The Human Cost of a Strategic Pivot

Beyond the financial figures, the true cost is being paid by the workers and community of Sault Ste. Marie. The 1,000 layoffs, representing roughly 40% of the workforce, became effective in March 2026. The impact was immediate and severe. “It’s absolutely devastating,” one economist noted, explaining that the job losses would spike the city’s unemployment rate by three percentage points in a region already facing economic headwinds.

Algoma Steel is more than an employer in Sault Ste. Marie; it is the economic heart of the city. The layoffs have created a ripple effect, touching families, local businesses, and even neighboring towns like Wawa and Thessalon, where many employees commute from. Workers now face the daunting challenge of finding new employment in a market with limited opportunities, with many fearing they will have to leave the community entirely. In response, the USW and government agencies are scrambling to establish job action centers and reskilling programs, a necessary but reactive measure in the face of such a massive workforce displacement.

The company has framed the layoffs as a painful but necessary step in a larger strategic transformation. Algoma is in the midst of a nearly $1 billion project to transition from traditional blast furnaces to modern Electric Arc Furnace (EAF) technology. This pivot, accelerated by external pressures, promises a greener, more competitive future for the company. However, it is a future that requires significantly fewer workers. This technological evolution, while crucial for long-term survival, has become a source of immediate hardship.

Public Funds and Private Fortunes

Complicating the narrative is the significant amount of public money propping up the steelmaker. The USW has pointed out that Algoma accepted “nearly $1 billion in public funding” before announcing the layoffs. This includes a $420 million commitment from the federal government in 2021 for the EAF transition and, more recently, a $500 million loan package from the federal and Ontario governments in November 2025. This latter package was explicitly intended to help Algoma navigate market conditions, maintain its workforce, and accelerate its strategic transition.

The fact that massive layoffs followed so closely on the heels of this public investment has led to pointed questions about corporate accountability. The union argues that public funds should come with ironclad commitments to protect jobs. The situation also highlights the difficult position of governments trying to support key industries. The primary driver of Algoma’s crisis, according to the company, was the “unprecedented” 50% tariff imposed by the United States, which effectively shut down its largest market.

In a sign that the government may be learning from this episode, reports indicate that the $500 million loan package came with conditions, including limits on executive compensation. While too late to affect Garcia’s 2025 package, it suggests a growing awareness that taxpayer support cannot be a blank cheque. As Algoma's new CEO, Rajat Marwah, steps in, and as shareholders prepare for their annual vote on executive pay, the company finds itself at a critical juncture, navigating the treacherous path between technological progress, market survival, and its social contract with the community that has sustained it for over a century.