- Draft - Designated Executive Compensation Program
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1 - Draft - Designated Executive Compensation Program March 2,
2 Table of Contents Purpose... 3 Designated Executives... 3 Compensation Philosophy... 3 Comparative Analysis and Comparators... 3 Comparative Analysis Details... 5 Structure... 7 Salary and Performance-Related Pay Envelope... 7 Other Compensation Elements for Designated Executives... 9 Additional Compensation Elements for the President & Vice-Chancellor and Rationale... 9 Contact Information
3 Purpose The purpose of the Designated Executive Compensation Program is to outline the program design and to demonstrate Brock University s compliance with Ontario Regulation 304/16, effective September 6, 2016, made under the Broader Public Sector Executive Compensation Act, 2014 (BPSECA). The draft program is being posted to allow opportunity for public comment, which will be considered when finalizing the program. Designated Executives The BPSECA, supported by Ontario Regulation 304/16, specifies criteria for determining Designated Executives. The following four (4) positions at Brock University meet the established criteria and are therefore classified as Designated Executives: 1. President and Vice-Chancellor 2. Provost and Vice-President, Academic 3. Vice-President, Research 4. Vice-President, Administration Compensation Philosophy Brock University seeks to attract and retain highly capable, established professionals in their respective fields, to lead the University s efforts in achieving its strategic mandate, and attaining teaching, research, and service standards of excellence. To that end, the compensation program for Designated Executives seeks to offer incumbents a market-competitive base salary and benefits package, which enables Brock to effectively compete for talent and to achieve its strategic objectives. It is further emphasized that incumbents, irrespective of gender, shall have equal opportunity to earn the maximum compensation permissible under this program. Lastly, a key tenet of Brock University s compensation philosophy is to ensure compliance with applicable legislative frameworks. Comparative Analysis and Comparators Ontario Regulation 304/16 provides direction in establishing appropriate comparators. The regulation provides for consideration of the following factors: - The scope and responsibilities of the organization s executives - The type of operations the organization engages in - The industries with which the organization competes for executives - The size of the organization - The location of the organization In selecting comparators, all five factors were utilized. Fundamentally, in terms of the type of operations the organization engages in, Brock University and all of the comparator organizations are comprehensive universities teaching programs at the undergraduate and graduate levels, engaging in significant research activity, and providing service to the community. 3
4 In selecting among comprehensive universities, a broad geographic representation within Canada was utilized, weighted towards Ontario (5). Additional universities from British Columbia (1), Saskatchewan (1), Quebec (1), New Brunswick (1), and Newfoundland (1) were also included. This geographically diverse set of universities acknowledges that candidates for Designated Executive roles are highly mobile. Brock s recruitment experiences for Designated Executive positions further supports taking a national approach to comparator organizations, as hires have relocated from across Canada to fill recent vacancies. Further, it is Brock s experience that incumbents employed in the university sector have filled the majority of Designated Executive roles and that competition for executives has been primarily within the university sector. From a financial perspective, the figures for operating expenditures per weighted full-time equivalent student help to assess the relative size of the comparator organizations. Brock s value of $11,437 is well aligned with the median comparator data set value of $11, The size of the student population is also a relevant consideration in assessing the size of the organization. With the median value for total students in the comparator data set being 20,840, Brock s 18,550 total student population is deemed to be within a reasonable range 2. While there is greater variability in revenue among the comparator group, revenue ratios were also reviewed to ensure reasonability to Brock. In terms of the scope and responsibilities of the organization s executives, organizations participating in the Council of Ontario Universities Compensation 2017 survey were required to match their positions to benchmark job descriptions in order to ensure appropriate comparators were utilized across the sector. For comparator organizations that did not participate in the aforementioned survey, position outlines and organizational charts were reviewed to ensure that there were a minimum of eight comparator organizations that matched Brock s Designed Executive s scope of responsibilities. While the roles of President and Vice-Chancellor; Provost and Vice-President, Academic; and Vice-President, Research are similarly comprised of similar responsibilities in the comparator organizations, the role of Vice-President, Administration is less standard in the composition of its portfolio. As the role at Brock is responsible for Finance, Human Resources, Information Technology, Facilities Management, Legal, University Secretariat, Campus Security, and Ancillary services, ensuring that comparator matches were of similar scope was an important consideration. The resulting list of comparator organizations is as follows: -Carleton University -Concordia University -Memorial University of Newfoundland -Ryerson University -University of Guelph -University of New Brunswick -University of Regina -University of Victoria -University of Windsor -Wilfrid Laurier University 1 MACLEANS Magazine (2018 University Rankings), pp
5 Comparative Analysis Details Chart A illustrates the position matches for each of Brock University s Designated Executives and the maximum salary for each Designated Executive, which is determined by assessing the 50 th percentile (median) compensation framework total cash of the comparators For the role of President and Vice- Chancellor, the position match is the role of President or President and Vice-Chancellor at the comparator organizations; for the role of Provost and Vice-President, Academic, the position match is the role of Provost and Vice-President, Academic or the role of Provost and Vice-President, Academic Affairs at the comparator organizations; for the role of Vice-President, Research, the position match is the role of Vice- President, Research or the role of Vice-President, Research and Innovation at the comparator organizations; for the role of Vice-President, Administration, the position match is the role of Vice- President, Administration or the role of Vice-President, Finance and Administration or the role of Vice- President, Finance and Operations at the comparator organizations. 5
6 Chart A - Matches and Maximum Salary (Combined) Brock Designated Executive Comparators with a Position Match President and Vice-Chancellor 1. Carleton University 2. Concordia University 3. Memorial University of Newfoundland 4. Ryerson University 5. University of Guelph 6. University of New Brunswick 7. University of Regina 8. University of Victoria 9. University of Windsor 10. Wilfrid Laurier University Provost and Vice-President, Academic 1. Carleton University 2. Concordia University 3. Memorial University of Newfoundland 4. Ryerson University 5. University of Guelph 6. University of New Brunswick 7. University of Regina 8. University of Victoria 9. University of Windsor 10. Wilfrid Laurier University Vice-President, Research 1. Memorial University of Newfoundland 2. Ryerson University 3. University of Guelph 4. University of New Brunswick 5. University of Regina 6. University of Victoria 7. University of Windsor 8. Wilfrid Laurier University Vice-President, Administration 1. Carleton University 2. Memorial University of Newfoundland 3. Ryerson University 4. University of Guelph 5. University of New Brunswick 6. University of Regina 7. University of Victoria 8. Wilfrid Laurier University 50 th percentile (Median) Compensation Framework Total Cash* $372,371 $279,242 $250,077 $268,997 *data obtained through submissions to Council of Ontario Universities Compensation 2017 survey when the comparator organization participated in the survey providing identifiable incumbent data, and directly from the comparator organization or from public salary disclosure documents when the organization was not a survey participant. *this becomes the Maximum Salary for Brock University s Designated Executives. 6
7 Structure 50 th Percentile (Median) Compensation Framework Total Cash in Chart A establishes the maximum base salary for each Designated Executive. This figure is derived in accordance with the BPSECA s direction for calculating the maximum salary by determining the maximum amounts of salary and performancerelated pay that may be paid to the executives in the comparator organizations who hold positions comparable to the position or class of positions held by the designated executive of class of designated executives. As Brock University s Designated Executive Compensation Program does not include a provision for performance-related pay, the base salary for each Designated Executive cannot exceed the 50 th Percentile (Median) Compensation Framework Total Cash outlined in Chart A. Accordingly, under the Brock University Designated Executive compensation program, the maximum base salary for the role of President and Vice-Chancellor is $372,371; the maximum base salary for the role of Provost and Vice- President, Academic is $279,242; the maximum base salary for the role of Vice-President, Research is $250,077; and the maximum base salary for the role of Vice-President, Administration is $268,997. Salary and Performance-Related Pay Envelope As noted in the paragraph above, Brock University s Designated Executive Compensation Program does not include a provision for performance-related pay, therefore the base salary for each Designated Executive cannot exceed the 50 th Percentile (Median) Compensation Framework Total Cash outlined in Chart A. In totality, the salary for the most recent pay year, for the four Designated Executive positions, is $1,062,319. Brock is proposing a 5% maximum rate of increase to the salary and performance-related pay envelope. In formulating this recommendation, the following factors were considered: - The financial priorities and the compensation priorities of the Ontario Government - Recent executive compensation trends in the part of the Canadian public sector and broader public sector that is in the industry within which the employer competes for executives - A comparison between the percentage of the employer s operating budget that is used for executive salary and performance-related pay and the percentages of the operating budgets of the designated employer s comparator organizations that are used for executive salary and performance-related pay - The effect on attracting and retaining talent to the employer s executive positions, and of the difference in salary and performance-related pay between designated executives and the employees who report to the holders of those positions - Any significant expansion in the operations of the employer that is not the result of a significant organizational restructuring. Taken in turn, the following supports Brock s request for a 5% maximum rate of increase: - As identified in a newsroom bulletin from the Treasury Board Secretariat 3, the Ontario Public Service (OPS) is seeking to ensure that a compensation plan is in place to allow the province to attract and retain highly skilled talent. The strategy is identified to be fiscally responsible and to base OPS executive salaries on the current median of public sector comparators in similar 3 7
8 jurisdictions. It further acknowledges that the non-bargaining employees have experienced a prolonged period of compensation restraint from The OPS narrative reflects a similar situation to Brock University s Designated Executives and demonstrates alignment in compensation philosophy and commitment to fiscal responsibility, while also permitting salary adjustments to market competitive positioning; - The 2017/18 budget is a balanced budget and the government is projecting that the next two budgets will be balanced as well, with economic indicators showing that Ontario s economy is strengthening. This further supports reasonable salary increases in a move towards market competitive positioning for Designated Executives; - The 2017/18 budget highlights the need for broader public sector organizations to be accountable for compensation decisions and to be able to attract and retain the necessary talent to deliver high-quality public services, while managing public dollars responsibly. Given that all of Brock s Designated Executives currently earn below the 50 th Percentile (Median) Compensation Framework Total Cash for the comparator organizations, it is imperative that the maximum rate of increase allow for these adjustments so Brock can compete effectively for talent, while balancing the need for fiscal responsibility; - The 2017/18 budget highlights the government s commitment to transforming the postsecondary education system to ensure it remains highly competitive and equips students for the challenges and opportunities of a changing global economy. As such, it is necessary for Ontario s universities to continue to rank high against international institutions, requiring the ability to attract and retain effective talent to serve as Designated Executives; - Recent compensation trends within the Ontario education sector are of little assistance in formulating the maximum rate of increase, as the rate of increase for the last several years was 0%. When looking at Canadian trends of 2.6% for broader public sector average executive compensation, it is tempered with the fact that Ontario salary increases have been 0% for several years. As Brock s current designated executive salaries are lagging the market, a greater maximum rate of increase is required; - Brock is currently allocating less than 0.5% of the operating budget to Designated Executive salaries, which is consistent with the average allocated to the position matches by comparator organizations with all four roles; - It should be noted that Brock has had recruitment processes for two Designated Executive positions within the past year. While the University is most pleased with the candidates who accepted positions, it should be noted that other candidates withdrew from the process due to salary limitations. In some cases, applicants were making similar rates as faculty members at other institutions, when compared to the salary Brock was able to offer for a Designated Executive role; - From a compression standpoint, the University and the Faculty Union recently settled on increases of 1.3% general plus 2.2% progression through the range increases for 2017/18; 1.4% general plus 2.2% progression through the range increases for 2018/19; and 1.5% general plus 2.2% progression through the range increases for 2019/20. As noted above, there is little financial incentive for a faculty member to accept a promotion to a senior administrative or Designated Executive role; a financial incentive that has decreased over time as faculty members continued to receive increases. A maximum rate of increase of 5% would therefore improve salary 8
9 differentials between Designated Executives with academic appointments and the employees they lead; - Brock is not currently anticipating a significant expansion in the operations, therefore this factor is not a relevant consideration in the maximum rate of increase. Other Compensation Elements for Designated Executives Administrative Leave Designated Executives who hold a faculty position at Brock University will accrue Administrative Leave at a rate of 10.4 weeks for each completed year of service, pro-rated for any partial years of service. This leave is to be taken immediately following the completion of the incumbent s term as a Designated Executive, unless mutually agreed upon by the incumbent and their direct supervisor. The Designated Executive s salary will be maintained for the period of the Administrative Leave. The intent of the Administrative Leave is to permit the Designated Executive to transition back to their faculty position in an effective manner, by re-engaging in scholarly and research activities that may not have been continued during the incumbent s term as a Designated Executive. Administrative Leave cannot be monetized, meaning that payment(s) in lieu of paid Administrative Leave is not permitted. Additional Compensation Elements for the President & Vice-Chancellor and Rationale Automobile Allowance The President and Vice-Chancellor is expected to travel regularly and extensively to carry out university business. As a result, the President & Vice-Chancellor may be provided with an annual automobile allowance, in lieu of submitting mileage for reimbursement. Eligibility for the automobile allowance is restricted to the period the incumbent serves as President & Vice-Chancellor and does not apply during any Administrative Leave, if applicable. The automobile allowance is treated as a taxable benefit. Supplemental Pension The Board of Trustees may, at its discretion, make a supplemental pension available for the President and Vice-Chancellor. In accordance with the compensation philosophy, the intent of the supplemental pension is to ensure Brock University offers a market-competitive total compensation package, as supplemental pensions are currently available to a number of Designated Executives in the university sector. Contact Information Brock University C/O Jennifer Guarasci, CHRL Acting Associate Vice-President, Human Resources 1812 Sir Isaac Brock Way St. Catharines, Ontario L2S 3A1 T: x 5335 F: E: jguarasci@brocku.ca 9
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