Executive Compensation Framework for Ontario BPS Organizations – A Summary of Recent Changes

On June 8 and 9, 2017, the Ontario government made a series of significant changes to the Broader Public Sector Executive Compensation Act (BPSECA) Executive Compensation Framework. 

• The changes include amendments to the content required of compensation programs
• The timing of the development of those programs
• The process organizations must follow to implement their compensation programs

Salary and Performance-Related Pay Caps: 

The existing general comparator process continues to apply, with some important exceptions:

• The Framework has been amended to require government approval of the comparator organizations chosen by a Broader Public Sector (BPS) organization
• The government has implemented a new process by which the salary and performance-related pay caps can be increased on an annual basis without the need for a formal recalculation process
• The process organizations must follow to implement their compensation programs

Salary and Performance-Related Pay Envelope: 

The Framework must create a new “salary and performance-related pay envelope” out of which all salary and performance-related pay must be paid to all designated executives. 

• BPS organizations calculate their “salary and performance-related pay envelope” according to a specified formula
• The salary and performance-related pay of each executive remains subject to the applicable caps. The new envelope process does not permit exceeding the caps
• In addition to approval of the ministry, the Framework continues to require the approval of the board of governors of the organization

Process: 

Each organization must develop a draft compensation program in accordance with the revised Framework by September 29, 2017. Once the draft program is developed, the following 5 steps must be undertaken:

1. The government has prepared a new Form to be used when submitting the draft compensation program to the organization’s overseeing ministry for review
2. The organization must review and address any government feedback that is provided as a result of the first step
3. Conduct public consultations by posting the draft program for at least 30 days on the organization’s public-facing website
4. The organization must summarize the public feedback and resubmit the compensation program to the overseeing ministry
5. The board of directors of the organization must now determine whether to adopt the compensation program

The deadline is September 29, 2017, which is coming quickly, so act now to make sure you are in compliance.