1.0 Introduction

The Management Board of Cabinet has issued this directive under the authority of the Broader Public Sector Executive Compensation Act, 2014 (the Act).

1.1 Governing Legislation

The Act was established on March 31, 2015 to manage executive compensation in the broader public sector. It authorizes the establishment of compensation frameworks applicable to designated employers and designated executives.

The Executive Compensation Framework regulation (the Regulation), established under the Act, applies to all designated employers under the Act.

Under the Act, the Lieutenant Governor in Council may make additional regulations establishing one or more compensation frameworks governing designated employers and designated executives. A regulation may be general or specific in application, and may apply,

  1. To all designated employers and designated executives;
  2. To classes of designated employers and classes of designated executives;
  3. To specific designated employers and specific designated executives; or
  4. Any combination of the above.

1.2 Purpose

The Broader Public Sector Executive Compensation Program Directive (the Directive) requires every designated employer to provide compensation information that the Management Board of Cabinet considers appropriate relating to proposed executive compensation programs developed in accordance with the Regulation.

The Directive outlines a process that every designated employer is expected to follow in order to develop its executive compensation program.

2.0 Application

The Directive applies to all designated employers under the Act, which includes:

  1. Every hospital within the meaning of the Public Hospitals Act and the University of Ottawa Heart Institute/Institut de cardiologie de l’Université d’Ottawa.
  2. Every board within the meaning of the Education Act.
  3. Every university in Ontario and every college of applied arts and technology and post-secondary institution in Ontario whether or not affiliated with a university, the enrolments of which are counted for purposes of calculating annual operating grants and entitlements.
  4. Independent Electricity System Operator.
  5. Ontario Power Generation Inc. and each of its subsidiaries.
  6. Every body prescribed as a public body under the Public Service of Ontario Act, 2006 that is not also prescribed as a Commission public body under that act.
  7. The corporation known as Ornge, incorporated under the Canada Corporations Act on October 8, 2004 as Ontario Air Ambulance Services Co.
  8. Subject to subsection 3(2) of the Act, every other authority, board, commission, committee, corporation, council, foundation or organization that may be prescribed by regulation.

The Regulation applies to all designated employers under the Act. The Lieutenant Governor in Council has the power to amend the Regulation so that it no longer applies to a designated employer or group of designated employers.

3.0 Submission requirements

A designated employer must submit each proposed executive compensation program to the Minister whose ministry funds, oversees or otherwise usually deals with the designated employer (overseeing Minister).

A designated employer must submit:

  • Its initial proposed executive compensation program by September 29, 2017.
  • Any subsequent proposed executive compensation program whenever it intends to revise its existing program.

3.1 Submission format

A designated employer may use the electronic form entitled Broader Public Sector Executive Compensation Program Form as a template for a proposed executive compensation program. A fillable version of the form is available on the Ontario Central Forms Repository.

A designated employer may elect to submit its proposed executive compensation program in an alternative format provided it includes all information required by the Directive.

4.0 Compensation information requirements

A designated employer shall submit a proposed executive compensation program that includes the compensation information set out below:

Compensation philosophy

Provide information on the designated employer’s compensation philosophy including details on how the proposed executive compensation program supports the designated employer’s strategic objectives and what the proposed executive compensation program, including its approach to performance-related pay, is designed to reward.

Salary and performance-related pay caps

List all designated executive positions at the designated employer.

Provide the salary and performance-related pay cap for each designated executive position or class of positions.

Indicate the class of each designated executive position as it relates to the salary and performance-related pay cap that applies.

Comparative analysis

List the comparator organizations and executive positions used to benchmark salary and performance-related pay at the designated employer for each designated executive position or class of position. Provide a rationale for the selected comparator organizations and explain how they are comparable to the designated employer with respect to three or more of the following factors:

  1. The scope of responsibilities of the organization’s executives.
  2. The type of operations the organization engages in.
  3. The industries within which the organization competes for executives.
  4. The size of the organization.
  5. The location of the organization.

Provide the percentile used to benchmark maximum salary and performance-related pay for each designated executive position or class of position.

Designated executive salary and performance-related pay envelope

Provide the designated executive salary and performance-related pay envelope calculated under the terms of the Regulation for the most recent pay yearfootnote 1 and the proposed maximum rate by which the envelope could be increased in each year.

Other elements of compensation

Provide a description of any compensation elements, other than salary and performance-related pay, that would be provided to designated executives but that are not generally provided in the same manner and relative amount to non-executive managers footnote 2 .

Include a rationale outlining the critical business reasons that justify the provision of each non-salary and performance-related pay element of compensation.

Supplementary information

A designated employer may elect to provide additional information to support or explain the information included in a proposed executive compensation program.

4.1 Additional requested information

A designated employer must provide any other compensation information that is requested by the overseeing Minister or the Minister to whom administration of the Act is assigned. Additional compensation information requested by the government may include information on both direct and indirect compensation.

5.0 Submission process

The Regulation requires each designated employer to engage in public consultations in which members of the public have a reasonable opportunity to provide comments on the manner in which the designated employer determines the compensation it may provide to its designated executives. It also requires each designated employer to seek overseeing Minister approval of specific components of the designated employer’s executive compensation program.

Designated employers are expected to develop each executive compensation program in accordance with the following steps. Once this process has been completed, the designated employer may adopt the resultant executive compensation program.

  1. Designated Employer Submits Proposed Executive Compensation Program for Government Review
    • The designated employer submits its proposed executive compensation program to its overseeing ministry.
    • Any designated employer seeking to use private sector or international comparators in its executive compensation program must have received approval to do so from the President of the Treasury Board, in accordance with the Regulation, prior to submitting a proposed executive compensation program for review.
  2. Designated Employer Addresses Government Feedback
    • The designated employer must address government feedback in its proposed executive compensation program and receive confirmation of approval to post the program from its overseeing ministry before moving to step three.
    • Government feedback would primarily focus on:
      • The comparator organizations used to calculate the designated employer’s maximum salary and performance-related pay amounts; and
      • The designated employer’s proposed maximum rate of increase to its salary and performance-related pay envelope.
    • Government feedback could include direction to resubmit a proposed executive compensation program after addressing comments.
  3. Public Consultation
    • The designated employer seeks public comment by posting its proposed executive compensation program on its public-facing website for a minimum of 30 days.
    • The designated employer must provide a notification to its overseeing ministry of when it intends to post for public comment two days before posting.
    • The designated employer is responsible for addressing relevant public feedback in its proposed executive compensation program.
  4. Designated Employer Applies for Overseeing Minister Approval of Specific Components
    • The designated employer must submit its proposed executive compensation program to its overseeing Minister along with summaries of the public feedback received and of any changes to the program since the government completed its review in step two.
    • Before the proposed executive compensation program can be finalized, the designated employer, in accordance with the Regulation, must obtain overseeing Minister approval of comparator organizations and the proposed maximum rate of increase to its salary and performance-related pay envelope.
  5. Board Approves Decision to Adopt and Employer Posts Final Program
    • The designated employer’s board of directors or equivalent authority determines whether to adopt the proposed executive compensation program.
    • The designated employer posts its finalized executive compensation program on its website as required by the Regulation.

6.0 Additional submission information

6.1 Subsequent submissions of Executive Compensation Programs

The overseeing Minister or the Minister to whom administration of the Act is assigned may request a proposed executive compensation program to be completed and submitted by a designated employer at any time. Upon receipt of a written request a designated employer must submit the requested information to that Minister within the timeline specified in the request.

A designated employer must also submit a proposed executive compensation program to its overseeing Minister when it intends to revise its existing executive compensation program.

6.2 Alternate timeline for submission of Executive Compensation Programs

In exceptional circumstances (e.g., a designated employer is newly created, undergoing mandate review, or intending to merge with another designated employer) a designated employer may seek authorization from the President of the Treasury Board, in writing, to defer the deadline for the submission of a proposed executive compensation program.

The request must include a rationale for the deferral as well as an alternate timeline for the designated employer to submit its proposed executive compensation program.