Broader Public Sector organizations across Ontario have until September 5, 2017 to comply with a new framework for executive compensation. This presentation goes through the process and a gameplan for ensuring compliance.

1. ONTARIO BROADER PUBLIC
SECTOR EXECUTIVE
COMPENSATION FRAMEWORK
M A R C H 2 1 , 2 0 1 7
NEIL SWIGGUM & ANAND PARSAN

2. TODAY’S DISCUSSION
INTRODUCTION TO THE ONTARIO BROADER PUBLIC SECTOR EXECUTIVE COMPENSATION FRAMEWORK
COMPLYING WITH THE REGULATION
• COMPENSATION PHILOSOPHY
• CONDUCTING THE COMPARATIVE ANALYSIS
• OTHER ELEMENTS OF COMPENSATION
• IMPLEMENTATION AND PUBLIC DISCLOSURE
• ADJUSTMENTS TO EXECUTIVE COMPENSATION
• COMPLIANCE
REACTION TO EXECUTIVE COMPENSATION FRAMEWORKS
2

3. 3
INTRODUCTION TO THE FRAMEWORK

4. 4
INTRODUCTION TO THE FRAMEWORK
REQUIREMENTS OF THE FRAMEWORK
• HAVE A WRITTEN COMPENSATION PHILOSOPHY
• CONDUCT A COMPARATIVE ANALYSIS
• CAP SALARY AND PERFORMANCE-RELATED PAY
• REFRAIN FROM PROHIBITED TYPES OF COMPENSATION
• PUBLICLY DISCLOSE DRAFT COMPENSATION PROGRAMS
• ANNUALLY ATTEST COMPLIANCE WITH FRAMEWORK REGULATION

5. INTRODUCTION TO THE FRAMEWORK
PURPOSE OF THE FRAMEWORK: THREE GUIDING PRINCIPLES
5
STANDARDIZATION BALANCE TRANSPARENCY

6. INTRODUCTION TO THE FRAMEWORK
ORGANIZATIONS THAT THE FRAMEWORK APPLIES TO
6
PUBLIC HOSPITALS AND THE UNIVERSITY OF OTTAWA HEART INSTITUTE
SCHOOL BOARDS
UNIVERSITIES
COLLEGES
IMPACTED
ORGANIZATIONS
IN ONTARIO
COMMUNITY CARE ACCESS CORPORATIONS
INDEPENDENT ELECTRICITY SYSTEM OPERATOR AND ONTARIO POWER GENERATION
ORNGE
PUBLIC BODIES UNDER THE PUBLIC SERVICE OF ONTARIO ACT, 2006 THAT ARE NOT
ALSO COMMISSION PUBLIC BODIES UNDER THAT ACT
We note that the list of covered organization is somewhat unclear regarding which specific
organizations are affected by the requirements and which are not. We recommend that organizations
confirming with their legal counsel if they are unsure if they are affected by the new regulations.

7. BASE SALARY
PERFORMANCE RELATED PAY
INTRODUCTION TO THE FRAMEWORK
EMPLOYEES THAT THE FRAMEWORK APPLIES TO
7
CASH
COMPENSATION
OF $100,000 OR
MORE
HEAD OF THE ORGANIZATION
VICE PRESIDENT
CHIEF ADMINISTRATIVE OFFICER
CHIEF OPERATING OFFICER
EXECUTIVE
POSITIONS
CHIEF FINANCIAL OFFICER
CHIEF INFORMATION OFFICER
DIRECTOR OF EDUCATION, SUPERVISORY OFFICER OF SCHOOL BOARD
ANY OTHER EXECUTIVE POSITION

8. INTRODUCTION TO THE FRAMEWORK
TIMEFRAME FOR COMPLYING WITH THE FRAMEWORK
8
SEPTEMBER
6, 2016
Framework
Regulation
Released
Full compliance
with Framework
for existing
positions
JANUARY
23, 2017
Framework
Guideline
Revised
MARCH 21,
2017
(TODAY)
Accompass
Framework
Session
SEPTEMBER
5, 2017
Compliant
Compensation
Program
Deadline
2020
5 MONTHS
THE DEADLINE FOR POSTING A COMPLIANT PROGRAM IS SEPTEMBER 5, 2017

9. INTRODUCTION TO THE FRAMEWORK
ELEMENTS OF THE WRITTEN PLAN
9
ORGANIZATION’S COMPENSATION PHILOSOPHY
SALARY AND PERFORMANCE-RELATED PAY CAPS
COMPARATIVE ANALYSIS DETAILS
OTHER ELEMENTS OF COMPENSATION PROVIDED
THE WRITTEN
COMPENSATION
PROGRAM

10. COMPENSATION PHILOSOPHY
THE WRITTEN COMPENSATION PHILOSOPHY
10
HOW
THE PROGRAM
SUPPORTS
GOALS AND
OBJECTIVES
WHAT
THE PROGRAM IS
DESIGNED TO
REWARD

11. CONDUCTING COMPARATIVE ANALYSIS
11
STEPS TO COMPARATIVE ANALYSIS
CREATE PRELIMINARY COMPARATOR UNIVERSE1
SCOPE OF RESPONSIBILITIES OF THE ORGANIZATION’S EXECUTIVES
TYPE OF OPERATIONS THE ORGANIZATION ENGAGES IN
INDUSTRIES WITH WHOM THE ORGANIZATION COMPETES FOR EXECUTIVES
SIZE OF THE ORGANIZATION
CAPS
DETERMINED BY
COMPARING
WITH
COMPARABLE
ORGANIZATIONS
LOCATION OF THE ORGANIZATION
MUST INCLUDE AT LEAST ONE ORGANIZATION FROM THE CANADIAN PUBLIC SECTOR OR BROADER PUBLIC SECTOR

12. LEVEL OF ACCOUNTABILITY
CONDUCTING COMPARATIVE ANALYSIS
12
STEPS TO COMPARATIVE ANALYSIS
CREATE PRELIMINARY COMPARATOR UNIVERSE
REMOVE ORGANIZATIONS NOT MEETING SIZE AND POSITION CRITERIA
1
2
SINGLE BIGGEST DRIVER OF EXECUTIVE COMPENSATION
ORGANIZATIONS SIGNIFICANTLY LARGER OR SMALLER THAN THE ONE BEING
CONSIDERED ARE GENERALLY NOT REASONABLE COMPARATORS, EVEN IF
OTHER ASPECTS (I.E. OPERATIONS, LOCATION, ETC.) ARE SIMILAR
DEPENDING ON THE TYPE OF ORGANIZATION, SIZE MAY BE CONSIDERED IN
DIFFERENT WAYS:
BY SIZE
GENERAL INDUSTRY ORGANIZATIONS: REVENUES + GOVERNMENT FUNDING
PENSION / INVESTMENT ORGANIZATIONS: AUM
AN ALTERNATIVE MEASURE OF SIZE IS ALSO FULL-TIME EMPLOYEES
COMPETENCIES
RELATIVE COMPLEXITYBY POSITION

13. CONDUCTING COMPARATIVE ANALYSIS
13
STEPS TO COMPARATIVE ANALYSIS
CREATE PRELIMINARY COMPARATOR UNIVERSE
REMOVE ORGANIZATIONS NOT MEETING SIZE AND POSITION CRITERIA
EVALUATE REMAINING ORGANIZATIONS BASED ON FRAMEWORK CRITERIA
1
3
2
IT IS NOT ALWAYS CLEAR WHAT CRITERIA SHOULD BE PRIORITIZED
USE A MATRIX APPROACH
EVALUATING
SIMILAR
ORGANIZATIONS

14. CONDUCTING COMPARATIVE ANALYSIS
14
STEPS TO COMPARATIVE ANALYSIS
CREATE PRELIMINARY COMPARATOR UNIVERSE
REMOVE ORGANIZATIONS NOT MEETING SIZE AND POSITION CRITERIA
EVALUATE REMAINING ORGANIZATIONS BASED ON FRAMEWORK CRITERIA
1
3
2
SEEK APPROVAL FOR NON-CANADIAN BPS COMPARATORS IF NEEDED4
SUBMIT A BUSINESS CASE
WHY THE ORGANIZATION AND EXECUTIVE POSITIONS CANNOT BE COMPARED TO CANADIAN BPS
IDENTIFY POSITIONS REQUIRING COMPARISON TO PRIVATE OR INTERNATIONAL COMPARATORS, AND WHY
APPROVAL
PROCESS

15. CONDUCTING COMPARATIVE ANALYSIS
15
CAP CALCULATION
COMPENSATION CAP FOR A GIVEN
EXECUTIVE POSITION OR CLASS CAN
BE NO GREATER THAN THE 50TH
PERCENTILE OF THE COMPENSATION
VALUES FOR COMPARABLE POSITIONS
WITHIN THE COMPARATOR GROUP
IF ALL
ORGANIZATIONS
IN
COMPARATOR
GROUP ARE
CANADIAN BPS
COMPENSATION CAP FOR A GIVEN EXECUTIVE POSITION OR
LEVEL CAN BE NO GREATER THAN THE 50TH PERCENTILE OF A
WEIGHTED CALCULATION OF THE COMPENSATION VALUES
FOR COMPARABLE POSITIONS WITHIN THE COMPARATOR
GROUP, WHERE CANADIAN BPS ORGANIZATIONS MUST
MAKE UP AT LEAST HALF THE WEIGHT IN CALCULATION
IF
COMPARATOR
GROUP
INCLUDES
ORGANIZATIONS
NOT IN
CANADIAN BPS

16. CONDUCTING COMPARATIVE ANALYSIS
16
ELEMENTS OF COMPETITIVE ANALYSIS DISCLOSURE
LIST OF THE COMPARABLE POSITIONS AND ORGANIZATIONS USED
DESCRIPTION OF HOW THE COMPARABLE POSITIONS ARE COMPARABLE TO DESIGNATED POSITION
DESCRIPTION OF HOW THE COMPARATOR ORGANIZATIONS ARE COMPARABLE TO THE DESIGNATED EMPLOYER
1
3
2
WEIGHT ASSIGNED TO EACH OF THE COMPARATOR GROUPS WHERE COMPARATORS WERE SELECTED FROM
OUTSIDE CANADIAN BPS
4

17. OTHER ELEMENTS OF COMPENSATION
17
IF THE ELEMENT IS GENERALLY PROVIDED TO NON-
EXECUTIVE MANAGERS:
IF THE ELEMENT IS REQUIRED FOR THE
PERFORMANCE OF THE EXECUTIVE'S
JOB OR FOR CRITICAL BUSINESS REASONS:
“Then the element may be provided in the same manner
and relative amount as what is generally
provided to non-executive managers.”
“Then the element may be provided and must be
supported by a business rationale. Otherwise, the
element is prohibited.”
EXAMPLES:
• Benefits (health, dental, insurance, etc.)
EXAMPLES:
• Car / travel allowances
PAYMENTS OR OTHER BENEFITS PROVIDED IN LIEU OF PERQUISITES
SIGNING BONUSES
RETENTION BONUSES
CASH HOUSING ALLOWANCES
STRICTLY
PROHIBITED
INSURED BENEFITS NOT GENERALLY PROVIDED TO NON-EXECUTIVE MANAGERS
SEVERANCE / TERMINATION PAY
PAID ADMINISTRATIVE LEAVE
CAPPED

18. ORGANIZATIONS MUST POST A DRAFT OF THEIR EXECUTIVE COMPENSATION PROGRAMS ON
THEIR PUBLIC WEBSITE FOR AT LEAST 30 DAYS TO ALLOW FOR PUBLIC FEEDBACK
ORGANIZATIONS MUST HAVE A PROCESS IN PLACE TO COLLECT FEEDBACK PROVIDED
ORGANIZATION MUST THEN POST THE PROGRAM ON THEIR WEBSITE, INCLUDING AN
OVERVIEW OF THE FEEDBACK RECEIVED DURING THE PUBLIC CONSULTATION PERIOD
THE FINAL, COMPLIANT EXECUTIVE COMPENSATION FRAMEWORK BECOMES EFFECTIVE FOR
THE ORGANIZATION ON THE DATE THAT IT IS POSTED
IMPLEMENTATION AND DISCLOSURE
18
FOR ORGANIZATIONS WITH REGULATIONS GOVERNING THEIR EXECUTIVE COMPENSATION THAT ARE ALREADY IN PLACE,
THESE REGULATIONS ARE IN ADDITION TO THE NEW ONTARIO BROADER PUBLIC SECTOR EXECUTIVE COMPENSATION
FRAMEWORK RULES AND THESE ORGANIZATIONS MUST COMPLY WITH BOTH
ORGANIZATIONS IN THIS SITUATION ARE RESPONSIBLE OBTAINING APPROVAL THROUGH THEIR OWN INTERNAL PROCESS IN
ACCORDANCE WITH THE MINISTRY THAT OVERSEES THEIR SPECIFIC EXECUTIVE COMPENSATION REGULATION BEFORE
PUBLISHING THEIR FINAL COMPENSATION PROGRAM
EXISTING
REGULATIONS
PUBLIC
CONSULTATION
THE DEADLINE FOR POSTING A COMPLIANT PROGRAM IS SEPTEMBER 5, 2017

19. ADDING NEW ELEMENTS TO COMPENSATION PROGRAMS
COMPENSATION ADJUSTMENTS TO DEFINED CAPS
SALARY INCREASES
MAKING ADJUSTMENTS TO EXECUTIVE COMPENSATION
19
RECALCULATING CAPS
ADDING NEW POSITIONS OR CHANGING CAPS FOR A POSITION
MAKING
ADJUSTMENTS

20. COMPLIANCE REQUIREMENTS
20
EXECUTIVE
COMPENSATION
PROGRAM
COMPLIANCE
ANNUAL
EXECUTIVE
COMPENSATION
COMPLIANCE

21. 21

22. DETERMINING HOW TO GAIN ACCESS TO THE COMPARATOR EXECUTIVE COMPENSATION DATA NEEDED
CREATING A COMPLIANT EXECUTIVE COMPENSATION STRUCTURE AND PHILOSOPHY
DEVELOPING A PROCESS TO COLLECT PUBLIC FEEDBACK ON THE DRAFT EXECUTIVE COMPENSATION FRAMEWORK
NEXT STEPS
22
DEFINING THE POPULATION OF EXECUTIVES COVERED
DETERMINING AN INITIAL UNIVERSE OF POTENTIAL COMPARATORS
NEXT STEPS
THE DEADLINE FOR POSTING A COMPLIANT PROGRAM IS SEPTEMBER 5, 2017
PREPARING A COMMUNICATIONS STRATEGY AROUND THE NEW EXECUTIVE COMPENSATION FRAMEWORK TO ADDRESS
POTENTIAL QUESTIONS AND CONCERNS FROM STAKEHOLDERS

23. ONTARIO’S BROADER PUBLIC
SECTOR EXECUTIVE
COMPENSATION FRAMEWORK
M A R C H 2 1 , 2 0 1 7
NEIL SWIGGUM & ANAND PARSAN