Executive Compensation Program

Background

In 2010, the Province legislated a two-year compensation freeze for all non-unionized employees in the Broader Public Sector (BPS) which prohibited increases to compensation, including rates of pay, pay ranges, benefits, perquisites and other payments, but allowed for employees to progress through the ranks if their terms and conditions of employment included a salary grid. In 2012, the Province lifted the compensation freeze for all non-unionized employees but continued a freeze on all elements of compensation for designated executives and certain office holders, including performance pay envelopes. These compensation restraint measures continue to apply until a compensation framework becomes effective for an employer, or by proclamation of the Lieutenant Governor.

In 2014, the Province approved the Broader Public Sector Executive Compensation Act, 2014 (BPSECA), which provides for the establishment of compensation frameworks, the details of which are outlined in Ontario Regulation 304/16, as amended by Ontario Regulation 187/17 (the Regulations), and the Broader Public Sector Executive Compensation Program Directive (the Directive).

Under the Regulations and the Directive, the Board of Directors of Temiskaming Hospital is responsible for:

• Approving all wage increases for designated executives;
• Developing an Executive Compensation Program (ECP) that includes a compensation philosophy, sets salary and performance related caps based on a comparable analysis of each designated executive position using at least eight (8) comparable organizations, specifies a maximum rate by which the total designated executive salary and performance related pay envelope could be increased in each year, and outlines any elements of compensation provided exclusively to designated executives with a corresponding rationale;
• Submitting by September 29, 2017 to the Ministry of Health and Long Term Care the proposed ECP;
• After receiving approval by the Ministry to do so, seek public input comment by posting its proposed ECP on its public-facing website for a minimum 30 days;
• Submit to the Ministry the summary of the public feedback received and any changes being made to the program;
• Secure approval by the Minister of comparator organizations and of the proposed maximum rate of increase to its salary and performance-related pay envelope;
• Approve the final ECP and post it on its website.

Designated Executives

The Executive Compensation Program applies to the following designated executives:

• President and Chief Executive Officer
• Chief Financial Officer
• Chief Nursing Executive

Compensation Philosophy

The ECP is designed to support the achievement of operating goals and strategic objectives by ensuring competitiveness so as to be able to attract, retain and motivate top-level talent that can ensure the quality care of patients in a safe manner to all. Temiskaming Hospital’s Board of Directors desires to attract and retain capable and qualified executives to run the hospital, a complex facility. The efforts of the Hospital Executives are critical in ensuring that the Board of Directors is able to achieve the Hospital’s Board approved strategic plan.

As required under the Excellent Care for All Act there is a minimum 5% performance based pay included in the total compensation provided to Hospital executives. In order to receive the full 5% the Hospital must fully achieve the objectives previously approved by the Board. Actual payments can range from 0% to 5% depending on the portion of the results achieved.

Additionally, Temiskaming Hospital’s location in Northern Ontario, away from larger urban centres, is a challenge in the recruitment process that must be reflected in the ECP.
Therefore, the ECP is designed to reward by:

• Offering comprehensive compensation including salary, performance-related pay, pension, benefits, and vacation;
• Reinforcing a results-oriented culture that recognizes both the accomplishments of pre-established performance goals and the means by which an individual accomplishes results;
• Establishing consistency in the design of compensation programs, while recognizing the need to reflect provincial markets;
• Administering compensation programs in a manner that is consistent, fair, equitable and free of discrimination;
• Supporting succession plans through talent management and career development;

 Determining Compensation Levels

Temiskaming Hospital’s comparator group includes eight (8) hospitals in Ontario, all except one similar in size of budget, employee population and number of beds. The exception is a larger hospital two hours north of Temiskaming Hospital (Timmins and District Hospital) which regularly recruits from the same talent pool as Temiskaming Hospital. The comparator group includes the following hospitals:

• Listowel Wingham Hospital Alliance
• West Nipissing General Hospital
• Matheson Iroquois Falls Cochrane
• South Bruce Grey Health Services
• Tillsonburg District Memorial Hospital
• Blanche River Health Partners
• Winchester District Memorial Hospital
• Timmins and District Hospital

The same comparator group will be used for all three (3) designated executive positions.

The selection criteria of comparable organizations were based on the following:

• Scope of responsibilities of the organization’s executives. Each of the comparable hospitals have similar executive roles, and are generally similar with respect to essential competencies (knowledge, skills and abilities), relative complexity and the level of accountability associated with the positions.
• Each has the equivalent of a CEO, CFO and CNE, all with similar responsibilities
• Industries within which the organization competes for executives. All comparator hospitals are publicly assisted hospitals located in Ontario. These comparator hospitals are part of the sector within which Temiskaming Hospital competes for executives.
• Size of the organization. All of the hospitals, except one, within the comparator group are similar sized based on budget, number of beds and employee population. The larger exception, Timmins and District Hospital is included because it recruits from the same talent pool as Temiskaming Hospital.
• Location of the Organization. All comparator hospitals are Ontario hospitals while additionally four of the hospitals are located in the same north-eastern Ontario geographical location.

 
Comparative Maximum Salary Analysis Detail

The salary information in the above noted table reflects the most recent twelve (12) month data, inclusive of both salary and performance-related pay, that could be obtained through the Ontario Hospital Association member executive salary survey.

Salary and Performance-Related Pay

Pursuant to the Regulations, the maximum salary and performance-related pay caps for each designated executive is based on the 50th percentile of the total salary paid for similar positions of the comparable hospitals as outlined above.

The maximum compensation for each designated executive is outlined in the chart below:

The minimum and maximum compensation for each designated executive is outlined in the chart below.

Adjustments to the Salary and Performance-Related Pay Cap

Once per year, pursuant to Regulations, Temiskaming Hospital may increase the salary and performance-related pay cap for a designated executive position by a rate that does not exceed the lesser of the following:

• The average rate of increase in salary and performance-related pay of the designated employer’s non-executive managers for the most recent one year period in respect of which Temiskaming Hospital determined the salary and performance-related pay to be paid to the non-executive managers.
• The public sector wage settlement trend in Ontario.

Designated Executive Salary and Performance-Related Pay Envelope

The Hospital’s total pay envelope for designated executives for the previous year was $446,250. The Board of Directors proposes that the maximum rate by which this envelope could be increased be set at 5%. In proposing the amount of 5%, the Board considered the five factors articulated in the Directive, which are summarized below:

• Financial and compensation priorities of the Ontario Government. The Ontario government has approved a balanced budget in 2017/2018 for the first time since 2008/2009.
• Compensation trends. According to the Ontario Ministry of Labour, the 11-year average from 2006 to 2016 of the annual wage base increase for the provincial public sector was 1.82%. Most of these employees also receive annual increases for progress through the ranks up to the maximum of their salary ranges.
• Proportion of the operating budget used for executive compensation. Temiskaming Hospital invested less than 2% of its annual budget in executive compensation.
• Impact of salary compression on attracting and retaining talent. Temiskaming Hospital continues to see the salary gap between designated executives and managers reporting to these executives become smaller each year.
• Expansion in the operation. Not applicable

Any adjustments in salary for a designated executive shall be approved by the Board of Directors and any adjustments to the salary and performance-related pay envelope shall also be determined by the Board of Directors.

Other Eligible Elements of Compensation

Compensation of designated executives is limited to salary and a potential 5% performance-based pay on an annual basis. No other perquisites are available to the group except those identical benefits that are received by all of the non-union group of employees.

Posted: April 11, 2018