O. Reg. 400/17: EXECUTIVE COMPENSATION FRAMEWORK
filed November 1, 2017 under Broader Public Sector Executive Compensation Act, 2014, S.O. 2014, c. 13, Sched. 1
Skip to contentontario regulation 400/17
made under the
Broader Public Sector Executive Compensation Act, 2014
Made: October 30, 2017
Filed: November 1, 2017
Published on e-Laws: November 1, 2017
Printed in The Ontario Gazette: November 18, 2017
Amending O. Reg. 304/16
(EXECUTIVE COMPENSATION FRAMEWORK)
1. The definition of “pay year” in subsection 1 (5) of Ontario Regulation 304/16 is amended by striking out “one year in respect of which” and substituting “365 consecutive days, or if the period includes February 29, 366 consecutive days, in respect of which”.
2. Subsections 3.2 (1) to (3) of the Regulation are revoked and the following substituted:
(1) A designated employer shall determine its salary and performance-related pay envelope for a pay year as follows, subject to any proration under subsection (3):
P + (P × R)
in which,
“P” is the salary and performance-related pay envelope for the previous pay year for the designated employer, as it was prorated under subsection (3), and
“R” is a rate of increase determined by the designated employer that does not exceed the maximum rate of increase in the salary and performance-related pay envelope, as determined under section 3.3.
(2) A designated employer shall not determine a salary and performance-related pay envelope within one year after the last time it determined a salary and performance-related pay envelope under this section.
(2.1) For the first pay year that a salary and performance-related pay envelope is determined under this section, the salary and performance-related pay envelope for the previous pay year for the designated employer is determined as follows:
1. Determine whether the designated employer’s terms of employment for its designated executives for the previous pay year provided for a limit on the total amount of performance-related pay that the designated employer’s designated executives were eligible to receive. The previous pay year limit may be a single amount, may be determined by adding up the limits that applied with respect to each designated executive position or may be determined in some other manner.
2. If there was a previous pay year limit described in paragraph 1, take the amount determined as follows, adjusted in accordance with paragraph 4:
S + MAXPRP
in which,
“S” is the total amount of salary that the designated employer’s designated executives received in the previous pay year; and
“MAXPRP” is the maximum amount of performance-related pay that the designated employer’s designated executives could have received in the previous pay year; if the terms of employment expressed this amount, in whole or in part, in relation to salaries, it is determined based on the salaries actually received — for example, if each designated executive was eligible to receive up to a specified percentage of their salary as performance-related pay, the maximum amount of performance-related pay is determined by totalling the amounts that are determined by, for each designated executive, multiplying the salary the designated executive actually received by the maximum percentage specified for that designated executive.
3. If there was not a previous pay year limit described in paragraph 1, take the total amount of salary and performance-related pay that the designated employer’s designated executives received in the previous pay year, adjusted in accordance with paragraph 4.
4. The adjustment referred to in paragraphs 2 and 3 is the following:
i. Annualize the amounts attributable to positions that were vacant for part of the previous pay year.
ii. Subtract the amounts attributable to positions that were eliminated in the previous pay year.
(3) The salary and performance-related pay envelope is prorated if, during the pay year,
(a) a designated executive position is created;
(b) a person is hired into a designated executive position;
(c) a designated executive position becomes vacant; or
(d) a designated executive position is eliminated.
3. Paragraph 5 of subsection 4 (2) of the Regulation is revoked and the following substituted:
5. The value of “P” used in the calculation of the salary and performance-related pay envelope under subsection 3.2 (1) for the most recent year in which a salary and performance-related pay cap was calculated or recalculated under section 3 for one or more designated executive positions or classes of designated executive positions.
4. The Regulation is amended by adding the following section:
Review
4.1 (1) The Minister shall complete a review of this Regulation no later than June 7, 2019.
(2) The review shall evaluate the effectiveness of this Regulation in furthering the purpose of the Act.
5. The Regulation is amended by adding the following section:
Same
6. (1) If a designated employer did not post an executive compensation program under subsection 4 (3) before the date section 5 came into force and posts an executive compensation program on or before February 28, 2018, the designated employer may, before the day the designated employer posts the executive compensation program, select a date for the purposes of this section.
(2) The selected date shall be a date during the period that begins on September 1, 2017 and ends on or before February 28, 2018.
(3) Subject to subsection (2), the selected date may be a date earlier than the day the designated employer posts the executive compensation program.
(4) If the selected date is in the pay year immediately preceding the pay year in which the executive compensation program is posted, all of the following rules apply:
1. A notional salary and performance-related pay envelope shall be determined for the pay year immediately preceding the pay year in which the executive compensation program is posted, as if it were determined under section 3.2 on the selected date.
2. A notional prorated increase is determined as follows:
(EN − PN) × (DN ÷ YN)
in which,
“EN” is the notional salary and performance-related pay envelope,
“PN” is the value for item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope,
“DN” is the number of days in the period that begins on the selected date and ends on the last day of the pay year immediately preceding the pay year in which the executive compensation program is posted, and
“YN” is the number of days in the pay year immediately preceding the pay year in which the executive compensation program is posted.
3. The designated employer may pay its designated executives additional pay for the pay year immediately preceding the pay year in which the executive compensation program is posted, up to the notional prorated increase.
4. The salary and performance-related pay envelope for the pay year in which the executive compensation program is posted is determined under section 3.2 but the value of item “P” in subsection 3.2 (1) is determined as follows:
PN + NPI
in which,
“PN” is the value for item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope, and
“NPI” is the notional prorated increase.
5. A current prorated increase is determined as follows:
(E − PN) × (D ÷ Y)
in which,
“E” is the salary and performance-related pay envelope for the pay year in which the executive compensation program is posted,
“PN” is the value for item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope,
“D” is the number of days in the period that begins on the first day of the pay year in which the executive compensation program is posted and ends on the day the executive compensation program is posted, and
“Y” is the number of days in the pay year in which the executive compensation program is posted.
6. The designated employer may pay its designated executives additional pay for the pay year in which the executive compensation program is posted, up to the current prorated increase.
7. The additional pay paid under paragraph 6 counts towards the maximum amount of salary and performance-related pay that the designated employer may pay for that pay year.
8. Despite anything to the contrary in subsection 3.2 (2), the designated employer may,
i. less than one year after the selected date, determine the salary and performance-related pay envelope for the pay year in which the executive compensation program is posted, and
ii. as early as the first day of the pay year following the pay year referred to in subparagraph i, determine the salary and performance-related pay envelope for the pay year following the pay year referred to in subparagraph i.
9. The designated employer shall include the following information in its executive compensation program instead of the information required by paragraph 5 of subsection 4 (2):
i. The value of item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope.
ii. The pay year in respect of which the value of item “P” referred to in subparagraph i was determined.
(5) If the selected date is in the same pay year as the pay year in which the executive compensation program is posted, all of the following rules apply:
1. A notional salary and performance-related pay envelope shall be determined for the pay year in which the executive compensation program is posted, as if it were determined under section 3.2 on the selected date.
2. A notional prorated increase is determined as follows:
(EN − PN) × (DN ÷ YN)
in which,
“EN” is the notional salary and performance-related pay envelope,
“PN” is the value for item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope,
“DN” is the number of days in the period that begins on the selected date and ends on the last day of the pay year in which the executive compensation program is posted, and
“YN” is the number of days in the pay year in which the executive compensation program is posted.
3. The salary and performance-related pay envelope for the pay year in which the executive compensation program is posted is not determined under section 3.2 but is determined as follows:
PN + NPI
in which,
“PN” is the value for item “P” in subsection 3.2 (1) used in the determination of the notional salary and performance-related pay envelope, and
“NPI” is the notional prorated increase.
4. Despite subsection 3.2 (2), the designated employer may, as early as the first day of the pay year following the pay year referred to in paragraph 3, determine the salary and performance-related pay envelope for the pay year following the pay year referred to in paragraph 3.
Commencement
6. This Regulation comes into force on the day it is filed.