Government reins in agency CEO pay and benefits
The Alberta government is cutting salaries and eliminating bonuses for the highest paid top executives of agencies, boards and commissions.
These changes set salary bands for CEOs at 23 of Alberta’s agencies, boards and commissions, bringing their pay in line with public sector equivalents. The changes also mandate the following:
- Eliminating executive bonuses
- Eliminating executive market modifiers, which is added pay over and above regular salary
- Capping executive severance pay at 12 months
- Aligning other executive compensation components, such as benefits like private health care access
- Eliminating perks such as retention bonuses, golf club memberships and housing allowances
These changes to compensation are expected to save government and agencies nearly $16 million a year. About half of the executive positions at these ABCs will see an overall reduction. Five other agencies must submit compensation plans annually for government approval.
“For far too long, the previous government allowed CEO salaries to balloon beyond reasonable levels at our agencies, boards and commissions despite recommendations by the Auditor General to rein them in. Albertans deserve better. In tough times, our government is making sure that ABC salaries are reasonable, in line with other provinces, and serve the public interest.”
The government examined compensation at agencies whose CEOs earn a base salary of more than $200,000 annually. An independent national consulting firm was commissioned to survey compensation for comparable public bodies across Canada to help determine appropriate amounts for Alberta’s agencies.
Agencies, boards and commissions subject to the new compensation framework:
- 23 agencies, boards and commissions are affected by the compensation regulation framework.
Agencies, boards and commissions required to submit executive compensation plans annually:
- Alberta Management Investment Corporation (AIMCo), Alberta Treasury Branch (ATB) and the Alberta Teachers’ Retirement Fund (ATRF). These large financial agencies have direct private sector counterparts, such as banks and investment firms. Their compensation must be designed for the specialized financial market in which they operate, while demonstrating alignment with government’s compensation principles.
- Alberta Health Services (AHS) is Canada’s only fully integrated provincial health system and there is no similar organization to provide a relevant comparison of compensation. AHS will submit a compensation plan to ensure scrutiny of its compensation practices. Transparency will continue to be provided through mandated salary disclosure.
- The Alberta Electric System Operator (AESO) plays a critical role as Alberta’s electricity system transitions to a capacity market. This shift requires executive continuity. In the interim, total compensation will be frozen at AESO and the agency will be required to submit a compensation plan that demonstrates how it is aligned to achieve the goals of the market transition.
- The regulation that enacts these changes comes into effect on March 16, 2017. It will apply immediately to new hires and reappointments and, after a two-year notice period, to incumbents.
- The regulation will affect about 270 executives and management employees.
- Agency salaries were benchmarked against public sector market data in the Alberta Public Service, municipalities, public bodies and other Canadian jurisdictions.
- Similar measures were implemented in British Columbia, Ontario, Quebec and Nova Scotia.
- The compensation changes are one component of government’s overall review of the province’s agencies, boards, and commissions:
- The ABC review was announced in 2015 and will examine more than 300 agencies, boards and commissions that do work on behalf of government in advisory, corporate enterprise, public trust, regulatory/adjudicative and service delivery roles.
- The first phase examined more than 130 agencies (excluding post-secondary institutions) governed by the Alberta Public Agencies Governance Act.
- As a result of the first phase, 26 agencies were consolidated or dissolved in 2016.
- Government also announced a transparent and accountable recruiting process for board directors on Alberta’s ABCs.
- As mandated by government, agencies began posting compensation amounts to the Public Sector Body Compensation Disclosure site, known as the Sunshine List, as of June 30, 2016.
- A salary freeze for all ABC management and non-union employees has been implemented for April 1, 2016 – March 31, 2018.