Grey Bruce Health Services (GBHS) Executive Compensation Framework. February Final Copy
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1 Grey Bruce Health Services (GBHS) Executive Compensation Framework February 2018 Final Copy
2 Grey Bruce Health Service has established an Executive Compensation Framework, a new requirement of the provincial government for designated public sector organizations, including colleges, universities, hospitals and government agencies. Hospital organizations are required to select at least eight comparator organizations, preferably in the same sector, and to set salary levels for the senior staff at no more than the 50th percentile in comparison with other similar organizations. Under this framework, public sector corporations will be prohibited from providing future salary increases above this level without public consultation, with the exception of cost of living increases that all staff receive. The provincial government has recognized that compensation needs to be fair for the responsibilities of executives who proudly serve in the public interest, but wants to further ensure that executive salaries are established and maintained appropriately. GBHS s Board of Directors has struck an Executive Compensation sub-committee to ensure that the process is completed fairly and puts the organization in a position to be able to attract executive talent in the future. The committee s preliminary evaluation indicates that GBHS s executive salaries are below the 50 th percentile of comparable organizations. The Executive Compensation Framework includes the following: President and Chief Executive Officer VP Corporate and Diagnostic Services (CFO) VP Patient Care and Quality (CNE) VP, People & Organizational Effectiveness (CHRO) VP Information Technology (CIO, CPO) Chief Communication and Public Affairs Officer Chief of Medical Staff We are committed to assuring our stakeholders that we are working hard as a Board to meet the requirements of the Ministry and support a compensation framework that makes good sense for our organization and the communities we serve. Mark Ostland Board Chair 2
3 Grey Bruce Health Services is a dynamic, multi-site health care organization with 6 hospitals and a withdrawal and addiction centre. GBHS has approximately 1600 employees and serves six rural communities in Lion s Head, Markdale, Meaford, Owen Sound, Southampton, and Wiarton. Each of our hospital sites offer acute care services, a 24-7 emergency department, and a full complement of diagnostic and laboratory services. GBHS is the regional stoke centre, provides a dialysis centre, mental health services and a neonatal intensive care unit. Surgical Services are offered at the Owen Sound and Meaford sites. We serve a community of approximately 165,000 residents in addition to 10,000 seasonal residents and 30,000 tourists that visit each year. EXECUTIVE COMPENSATION PHILOSOPHY A compensation philosophy is a set of guiding principles that drive compensation decision making in an organization. Pursuant to the Executive Compensation Framework Regulation ( Regulation ) under the Broader Public Sector Executive Compensation Act, 2014, the philosophy must be included in the executive compensation program and requires a description of: 1. How the executive compensation program is designed to support the achievement of operational goals and strategic objectives; and 2. What the executive compensation program, including its approach to performancerelated pay, is designed to reward. Grey Bruce Health Services compensation policy is based on the Board s vision of attracting, retaining, and motivating highly qualified and accountable senior leaders in a manner that complies with the regulation, is competitive and affordable, and aligns with the organization s operational goals and strategic objectives. The primary principles that guide our compensation program are results driven, transparency, fairness, consistency and responsibility to our stakeholders. The compensation structure will follow the same principles and practices as all other compensation programs in the organization. The Executive Compensation Program will be internally equitable, externally competitive and reward individual and team performance. The Executive Compensation Framework is in keeping with the Broader Public Sector Executive Compensation Act 2014 (BPSECA) and regulation 304/16 last amended on June 8,
4 DESIGNATED EXECUTIVE POSITIONS Under the Broader Public Sector Executive Compensation Act (BPSECA), designated executives and office holders include individuals who meet both of the following criteria: 1. The employee or office holder is: a. The head of the designated employer, regardless of title of the position or office; b. A Vice President, Chief Administrative Officer, Chief Operating Officer, or holds any other executive position or office, regardless of title; AND 2. Under their compensation plan, the employee or office holder is entitled to receive, or could potentially receive, annual cash compensation of $100,000 or more. The following designated executive positions and classes for Grey Bruce Health Services are included: Job Title President and Chief Executive Officer VP Corporate and Diagnostic Services (CFO) VP Patient Care and Quality (CNE) VP People & Organizational Effectiveness (CHRO) VP Information Technology (CIO, CPO) Chief Communication and Public Affairs Officer Chief of Staff Class of Position Class 1 - President and Chief Executive Officer Class 2 Vice President Class 2 Vice President Class 2 Vice President Class 2 Vice President Class 3 Chief Class 4 Chief of Medical Staff COMPARATOR SELECTION In establishing the compensation program, the Board of Directors itemized a number of objective indicators to be used in the identification of comparator organizations. Only community hospitals in Ontario have been used as comparators for the purposes of determining executive compensation. The indicators selected to determine comparator hospitals are identified below. Scope of responsibilities: The organization s executives must hold similar accountabilities to Grey Bruce Health Services executives. Type of services: The organization must be a Hospital as defined by the Ontario Public Hospitals Act. Furthermore, must be an Ontario Community Hospital (excludes academic hospitals and specialty hospitals). 4
5 Size of organization: Must have an operating budget between $38M and $64M, and staff full time equivalent (FTE) count between 100 and Organization location: Located in the province of Ontario. The comparator organization must have at least one executive who holds a position comparable to the position of the executive (or class of executives) being examined. Comparable positions generally include those that are similar with respect to essential competencies (knowledge, skills, and abilities), not be job title match. A minimum of eight (8) comparator organizations must be selected. The Hospital s ten (10) chosen comparators are subject to approval by the Minister of Health and Long-Term Care. The below tables outline the comparator organizations chosen for each class of designated executives at Grey Bruce Health Services and the salary and performance-related pay cap. 5
6 Executive Class 1 President and Chief Executive Officer Included Position(s) President and Chief Executive Officer Comparable organizations were chosen for the role of President and Chief Executive Officer using the following criteria: Scope of Responsibilities: A President and CEO who is the most senior administrative officer of the organization. This position reports to the Board of Directors and is responsible for working with the Board to establish the mission, vision and values of the organization and overseeing the operations of the organization. Size of the Organization: Grey Bruce Health Services has an operating budget of $182 million. Comparator organizations were chosen with an operating budget between ¾ of the size of our operating budget and 2 times the size. Comparator organizations had an operating budget between $38 and $64 million. The average operating budget of the comparator group of hospitals is $200 million. All comparators are within Ontario and many are in a rural setting. Type of Services: Grey Bruce Health Services is a multi-site organization with six hospitals and a withdrawal and addiction centre located across a broad geographic area. Multi-site comparator organizations of a smaller size other than Quinte do not exist as comparators. Grey Bruce Health Service is a regional health centre with speciality services. Grey Bruce Health Services is the regional stroke centre, provides a dialysis centre, mental health services and a neonatal intensive care unit. Core services used for comparison include an ER, inpatient beds; ambulatory care, diagnostic imaging, lab, pharmacy, women and childcare and OR services. Location: All Comparators are within the Province of Ontario Comparator Organizations Chosen: North Bay Regional Health Centre Sault Area Hospital Quinte Hospital Royal Victoria Hospital Guelph General Hospital Chatham Kent Health Alliance Cambridge Hospital Peterborough Regional/Ross Memorial Hospital Grand River Hospital Salary and Performance-related Pay Cap (based on 50 th percentile) $325,000 6
7 Executive Class 2 Vice President Included Position(s) VP Corporate and Diagnostic Services (CFO) VP Patient Care and Quality (CNE) VP People & Organizational Effectiveness (CHRO) VP Information Technology (CIO, CPO) Comparable organizations were chosen for the role of Vice President using the following criteria: Scope of Responsibilities - Vice President, Corporate and Diagnostic Services, CFO: This position is the most senior financial officer of the organization and reports to the President and CEO. Responsibilities include financial oversight of the operations, producing and analyzing financial reports for the CEO and Board of Directors and capital planning. This position provides financial and sustainability strategy. Additional responsibilities include laboratory, pharmacy, diagnostic imaging, food services, plant and facilities and environmental services. This position has Chief Financial Officer responsibilities at South Bruce Grey Health Centre. Scope of Responsibilities Vice President, Patient Care and Quality (CNE) This position is the most senior nursing officer of the organization and reports to the President and CEO. Responsibilities include patient care and clinical programming, nursing and professional standards, patient relations and safety, patient flow and quality improvement. The position is responsible for implementing and overseeing best practice and ensuring quality of care for the patients we serve. Scope of Responsibilities Vice President, People & Organizational Effectiveness (CHRO) This position is the most senior human resources officer of the organization and reports to the President and CEO. Responsibilities include accountability for organizational development, transformation, training and education, employee and labour relations, collective bargaining, policy formulation and policy administration for human resources functions, recruitment and retention, compensation and benefits, occupational health and safety,, volunteers program and medical affairs. This position has Chief Human Resources responsibilities for South Bruce Grey Hospital Centre. Scope of Responsibilities Vice President, Information Technology (CIO, CPO) This position is the most senior information technology officer and reports to the President and CEO. Responsibilities include overall accountability for all hospital information systems including health and medical records, financial information systems, telecommunications, biomedical engineering and decision support. This position services as the Hospital s Chief Privacy Officer. This is a multi-corporation position with Chief Information Officer responsibilities and leadership at 6 Hospitals including Orillia Soldiers Memorial; Muskoka Algonquin Hospital, Almonte Hospital, South Bruce Grey Health Centre and Hanover District Hospital. 7
8 Size of the Organization: Grey Bruce Health Services has an operating budget of $182 million. Comparator organizations were chosen with an operating budget between ¾ of the size of our operating budget and 2 times the size. Type of Services: Grey Bruce Health Services is a multi-site organization with six hospitals and a withdrawal and addiction centre located across a broad geographic area. Multi-site comparator organizations were used where possible. Grey Bruce Health Service is a regional health centre with speciality services. Grey Bruce Health Services is the regional stroke centre, provides a dialysis centre, mental health services and a neonatal intensive care unit. Core services used for comparison include an ER, inpatient beds; ambulatory care, diagnostic imaging, lab, pharmacy, women and childcare and OR services. Location: All Comparators are within the Province of Ontario Comparator Organizations Chosen: North Bay Regional Health Centre Sault Area Hospital Quinte Hospital Royal Victoria Hospital Guelph General Hospital Chatham Kent Health Alliance Cambridge Hospital Peterborough Regional Hospital Grand River Hospital Salary and Performance-related Pay Cap (based on 50 th percentile) Executive Class 3 Chief Communications Included Position(s) $207,000 Chief Communication and Public Affairs Officer Comparable organizations were chosen for the role of Vice President using the following criteria: Scope of Responsibilities Chief of Communication and Public Affairs Officer This position is the most senior role in the organization responsible for the development and implement of a communication strategy. Responsibilities include internal communication to staff, physicians and volunteers on a hospital operations and priorities as well as communication to the customs we serve, our patients and their families, our partners, the general public, and others. In addition, this role has responsibilities as our Foundation liaison, spiritual care, and library service. Size of the Organization: Grey Bruce Health Services has an operating budget of $182 million. Comparator organizations were chosen with an operating budget between ¾ of the size of our operating budget and 2 times the size. 8
9 Type of Services: Grey Bruce Health Services is a multi-site organization with six hospitals and a withdrawal and addiction centre located across a broad geographic area. Multi-site comparator organizations were used where possible. Grey Bruce Health Service is a regional health centre with speciality services. Grey Bruce Health Services is the regional stroke centre, provides a dialysis centre, mental health services and a neonatal intensive care unit. Core services used for comparison include an ER, inpatient beds; ambulatory care, diagnostic imaging, lab, pharmacy, women and childcare and OR services. Location: All Comparators are within the Province of Ontario Comparator Organizations Chosen: Huron Perth Health Alliance Chatham Kent Health Alliance Bluewater Health Middlesex Hospital Orillia Soldiers Memorial Hospital Waypoint Hospital Grand River Hospital McKenzie Health Hospital Salary and Performance-related Pay Cap (based on 50 th percentile) Executive Class 4 Chief of Staff Included Position(s) $129,305 Chief of Medical Staff Comparable organizations were chosen for the role of Vice President using the following criteria: Scope of Responsibilities - Vice President, Corporate and Diagnostic Services, CFO: The Chief of Staff is the most senior physician in the organization responsible for the medical staff. The Chief of Staff is a member of the senior management team. Key responsibilities include making recommendations on the credentialing of physicians to the Board of Directors, working with Division and Department Chiefs to ensure programs and services are resourced are operating in accordance with performance expectations and best practice. Size of the Organization: Grey Bruce Health Services has an operating budget of $182 million. Comparator organizations were chosen with an operating budget between ¾ of the size of our operating budget and 2 times the size. Type of Services: Grey Bruce Health Services is a multi-site organization with six hospitals and a withdrawal and addiction centre located across a broad geographic area. Multi-site comparator organizations were used where possible. Grey Bruce Health Service is a regional health centre with speciality services. Grey Bruce Health Services is the regional stroke centre, provides a dialysis centre, mental health services and a neonatal intensive care unit. Core services used for comparison include an ER, inpatient beds; ambulatory care, diagnostic imaging, lab, pharmacy, women and childcare and OR services. 9
10 Location: All Comparators are within the Province of Ontario Comparator Organizations Chosen: Huron Perth Health Alliance Sault Area Hospital Bluewater Health Windsor Hospital Royal Victoria Hospital Guelph General Hospital Cambridge Hospital Peterborough Regional Health Centre Salary and Performance-related Pay Cap (based on 50 th percentile) $210,600 SALARY AND PERFORMANCE-RELATED PAY STRUCTURE Maximum cash compensation available to designated executives under the Regulation can be no greater than the 50 th percentile of the maximum available salary and performance-related pay at comparator organizations. The Regulation provides that maximum total cash compensation available for designated executives or classes of executives is to be calculated in the following manner: 1. Determine the maximum amounts of annual salary and performance-related pay available to designated executives of the comparator organizations who hold comparable positions to the Hospital s designated executives: 2. Select a percentile that is no greater than the 50 th percentile (median of the above amounts determined; and 3. Calculate the amount (job rate) that is at the selected percentile. Calculations must occur for each designated executive or class of executives on the Hospital s senior leadership team. Executive Position/Cl ass Class 1 President and Chief Salary Range Minimum Job Rate Salary Range Maximum Target Annual Performance Related pay (% of Salary) Maximum Annual Performance Related Pay (% of Salary) Salary and Performance Related Pay Cap ($) $269,151 $309,254 $309,524 5% 5% $325,000 10
11 Executive Officer Class 2 Vice President $171,429 $197,143 $197,142 5% 5% $207,000 Class 3 Chief Communic ations Class 4 Chief of Staff $107,085 $123,148 $123,148 5% 5% $129, 305 $174,410 $200,571 $200,571 5% 5% $210,600 Salary ranges are established for each job classification. Progression through the salary range is based on meeting the required responsibilities as outlined in the job description, the performance review, and meeting individual performance targets as well as targets established in the Quality Improvement Plan. Movement through the salary range is capped at a maximum of 5% per year. Subject to approval by the Minister of Health and Long-Term Care, the table below outlines the maximum cash compensation available to the Hospital s designated executive positions or classes of designated executive positions (actual compensation may be less). The Hospital chose to use the 50 th percentile for purposes of establish the pay structure: The Broader Public Sector Executive Act (BSPECA) allows designated employers to increase the salary and performance-related pay cap for a designated executive position or class of designated executive positions once per pay year, at a rate that does not exceed the lesser of the following: 1. The average rate of increase in the salary and performance pay of the designated employer s non-executive managers in the most recent one-year period in respect of which the employer determined the salary and performance pay to be paid to the nonexecutive managers, or 2. The public sector wage settlement trend in Ontario as set out in the provincial Budget, Economic Outlook, Fiscal Review or public documents of the Crown, provincial Cabinet, the Treasury Board or the Management Board of Cabinet. The salary and performance related pay that a designated employer provides for a designated executive position within one year must not exceed the salary and performance related pay caps calculated for the position or for the class of positions to which the position belongs. SALARY AND PERFORMANCE-RELATED PAY ENVELOPE 11
12 The Regulation incorporates the concept of a salary and performance pay envelope which is the total executive salary and performance pay provided to all designated executives. The envelope enables the designated employer to increase the salary and performance pay of designated executives each year to a maximum rate as approved by the Minister of Health and Long Term Care. The proposed increase to the pay envelope for Grey Bruce Health Service s executives has been held strictly within the mandates of the government legislation. 1. The proposed increase respects the financial and compensation priorities of the Government of Ontario by providing a modest and reasonable increase to salaries that have remained frozen since The proposed increase has been established by reviewing the salary of organizations for which we compete for talent. We have only selected community hospitals that are similar in size and services within the province of Ontario. 3. Grey Bruce Health Services has compared the size of their executive pay envelope to comparator organizations. GBHS is comparable or lower as the executive positions have been reduced by one and some executive roles are shared with other hospitals. 4. The adjustment to the pay ranges of Executives creates reasonable differentials in pay for positions that report directly to the executive positions. Grey Bruce Health Services is committed to work as a proactive health care leader in our Grey and Bruce communities. Competitive pay is required to attract and retain the necessary talent to execute this vision. Sum of Salary and Performance-related Pay Maximum Rate of Increase to Envelope for the Most Recently Completed Pay Year $1,275,120 5% The total salary and performance related pay that a designated employer provides to all of its designated executives for a pay year must not exceed the salary and performance related pay envelope for that pay year. RECALCULATING CAPS and ADDING NEW POSITIONS The Regulation requires that all salary and performance-related pay caps must be recalculated in the event of significant organizational restructuring. The salary and performance-related pay caps for select executive positions or classes of positions may be added or recalculated when circumstances warrant it, such as in situations where the employer is: 1. Incorporating new designated executive positions or classes of designated executive positions; 2. Accounting for significant changes in responsibilities for a designated executive or class of designated executives; and 12
13 3. Any other situation that results in a discrepancy between the responsibilities of a designated executive position or class of designated executive positions and an established cap. The requirement to conduct a comparative analysis and to engage in public consultation must be met each time an employer recalculates caps or adds new positions to its executive compensation framework. In addition, the Minister of Health and Long-term Care must reapprove chosen comparators and the maximum rate of increase. OTHER ELEMENTS OF COMPENSATION The Regulation sets limits and prohibitions on elements that can be included in this compensation package of an executive. Grey Bruce Health Services does not provide payments or other benefits provided in lieu of perquisites; signing bonuses; retention bonuses; cash housing allowances; insured benefits that are not generally provided to non-executive managers; termination payments in excess of 24 times the average monthly salary; termination/severance in the event of termination for cause; payment for administrative leave. The President and CEO receives a car allowance of $700/month. Grey Bruce Health Services is a multi site organization that spans a significant geographic area in Grey and Bruce Counties. Regular operational responsibilities require travel between sites on a daily to weekly basis. The administrative office is in Owen Sound and travel to other sites (Lion s Head, Markdale, Meaford, Southampton, and Wiarton) is between 24-65kms. The President and CEO participates on Committees, attends meetings and has additional work responsibilities that require regular travel beyond Grey Bruce counties. A car allowance is an efficient and economical means of compensation for this expected travel. 13
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