On June 9, the Ontario government announced a new program directive and amendments to the original Executive Compensation Framework regulation released in September, 2016 (O.Reg. 304/16), made under the Broader Public Sector Executive Compensation Act, 2014 (BPSECA). The documents outline several new requirements and process changes that designated employers must follow when establishing their executive compensation programs.
The key changes to the regulation are:
- Introduction of the executive compensation envelope – the amendments to the Framework include the creation of the ‘executive salary and performance-related pay envelope’, consisting of the maximum salary and performance-related pay available to all designated executives in a given year. This pay envelope will be the basis for determining the total amount of additional compensation that can be provided to all designated executives each year.
- Annual increases to pay caps – Executive pay caps can now be increased once per year. This increase will be determined by the lesser of:
- The average rate of increase in salary and performance-related pay provided to non-executive managers; and
- The public-sector wage settlement trend as set out in several specified public sources.
- Government approval requirements – once a draft executive compensation program has been developed, it must now be submitted to the overseeing ministry for approval. Any government feedback that is provided must be reviewed and addressed and government approval must be received to post the program document for public comment. Once public feedback is received, a detailed summary of the feedback, along with any additional updates made to the program must be resubmitted to the overseeing ministry for final approval.
To allow designated employers time to address the new requirements, the Ontario government has provided an extension to the original compliance timeline. Designated employers must submit their draft compensation programs for review by September 29, 2017, prior to public posting.
Designated employers should keep in mind that additional requirements will impact timelines for completing draft compensation programs. A thorough review of the updated Broader Public Sector Executive Compensation Program Guide and Directive, as well as the full Framework Regulation is recommended. Links to all the documents are provided below: