Ontario to cap executive and performance pay – at last!

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Ontario is implementing a new framework for broader public sector executive compensation, including capping salary and performance-related payments for hospitals, universities, colleges, schools boards and government agencies.

The framework regulation comes into force on September 6, 2016, and applies to all designated employers under the Broader Public Sector Executive Compensation Act, 2014.

The framework caps salary and performance-related payments for designated executives at no more than the 50th percentile of appropriate comparators and prohibits signing bonuses, retention bonuses, cash housing allowances and pay in lieu of perquisites.

“This balanced approach will ensure that broader public sector organizations are accountable for compensation decisions and are able to attract and retain the necessary talent to deliver high quality public services while managing public dollars responsibly,” said   Liz Sandals, President of the Treasury Board.

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As part of this process, employers will be required to consult with the public when determining executive compensation programs and to post program details to their websites. Employers will be required to submit reports attesting that the compensation for their designated executives complies with the framework. Failure to complete this process could lead to penalties.

  • The Broader Public Sector Executive Compensation Act, 2014 was proclaimed on March 16, 2015 and applies to approximately 340 employers, including hospitals, school boards, universities, colleges, and designated provincial agencies.
  • Designated executives under the legislation are employees and office holders eligible to receive $100,000 or more in a calendar year, including CEOs, presidents, vice-presidents, chief officers, directors of education, and supervisory officers at school boards.
  • Executive compensation at hospitals, school boards, colleges, universities, and hydro entities has been restrained under the Broader Public Sector Accountability Act, 2010 since March 31, 2012. All elements of compensation have been frozen, including base salaries.
  • The existing freeze on salaries for executives under the Broader Public Sector Accountability Act, 2010 remains in effect for a designated employer until the employer posts their final executive compensation program to their public website. – CINEWS
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