Advisory Committee on Senior Level Retention and Compensation
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The Honourable Vic Toews, P.C., Q.C., M.P.
President of the Treasury Board
House of Commons
Ottawa, ON K1A 0A6
Dear Minister Toews:
The Advisory Committee on Senior Level Retention and Compensation met on November 23 and 24, 2008 to discuss a number of issues with respect to the recruitment and retention of senior public servants. We reviewed the latest available information on compensation trends for executives in the public and private sectors. Our focus, as you know, is compensation for senior levels of the public service, including executives, deputy ministers, other governor in council appointees and chief executive officers of Crown corporations.
We recognize that the economic and fiscal environment has changed dramatically over the last few months. Indeed, our meeting took place just after the Speech from the Throne where the Government underlined the need to restrain growth in public service compensation. In light of the uncertain economic times and the need to demonstrate strong fiscal management, we commend the government's approach in this regard.
When we consider recommendations for annual salary adjustments, we examine data from a number of comparator groups including the private sector. However, for the salary year of 2009-2010 only, we are suspending this comparison. We are recommending extending the same salary adjustment to senior leaders as is offered to all other public service employees for 2009-2010.
One of the key issues we have been considering is performance management. A rigorous performance management regime is critical to a high performing public service, particularly at the most senior levels. Over the past several years, we have witnessed and encouraged a significant improvement in the rigour of performance management for deputy ministers. In our view the current system of assessing the performance of deputy ministers and associate deputy ministers is a best practice. As a result we are pleased that the government is taking steps to align executive performance management more closely to that of deputy minister.
Given that a strong performance management system is in place, we have recommended increases to variable pay for the past number of years. The performance pay component of public service senior level compensation has now become a significant portion of salary that must be re-earned every year, and it is tied to the achievement of business objectives. Those who do not achieve results do not receive any at-risk pay, and those who fully succeed receive all of their at-risk pay. Determining whether and how results are achieved is an integral function of the performance management system.
Altering the pay-at-risk performance system would negate much of the progress that has been made in recent years in holding executives and deputy ministers accountable for the results they achieve. We do not feel this would be in the best interests of the Government or of Canadians. Therefore, we are recommending the pay-at-risk pay remain at levels approved in 2008-2009.
In summary, our recommendations for 2009-2010 for senior levels are:
- That a 1.5 per cent economic increase be provided for executives, deputy ministers, other governor in council appointees and chief executive officers of Crown corporations; and,
- That at-risk pay be maintained at the levels approved in 2008-2009.
The recommended cash compensation is shown in Appendix Three. I would be pleased to discuss this with you further.
Carol Stephenson
Appendix One:
Mandate of the Advisory Committee on Senior Level Retention and Compensation
To provide independent advice and recommendations to the President of the Treasury Board concerning executives, deputy ministers and other Governor-in-Council appointees of the federal Public Service and public sector on:
- developing a long-term strategy for the senior levels of the Public Service that will support the human resource management needs of the next decade,
- compensation strategies and principles, and
- overall management matters comprising among other things human resource policies and programs, terms and conditions of employment, classification and compensation issues including rates of pay, rewards and recognition.
To present recommendations in a report to the President of the Treasury Board. The report will be made public by the President of the Treasury Board.
Appendix Two: The Advisory Committee on Senior Level Retention and Compensation
Carol M. Stephenson, B.A., (Committee Chair)
Dean, Richard Ivey School of Business, Ms. Stephenson, a widely respected CEO in the Canadian telecom industry, was appointed Dean of the Richard Ivey School of Business in July 2003. In 1999 she was appointed Chief Executive Officer of Lucent Technologies Canada. Prior to that, she was President and Chief Executive Officer of Stentor Resource Centre Inc., and Vice-President of Bell Canada.
Gaétan Lussier, O.C., B.Sc. (Agr.), M.Sc., Ph.D.
President, Gaétan Lussier and Associates, Mr. Lussier is a past Assistant Deputy Minister and Deputy Minister at the Quebec Ministry of Agriculture; and, federally, a past Deputy Minister of Agriculture Canada and past Deputy Minister and Chairman, Employment and Immigration Canada. Mr. Lussier was also President of the External Advisory Committee on Smart Regulation and is the founder of the Canadian Agri-Food Policy Institute (2004). Moreover, he was President of Boulangeries Weston Québec Ltd. and past President and Chief Executive Officer of Culinar Inc.
Patrick O'Callaghan, B.A., M.B.A.
President, Patrick O'Callaghan & Associates, Mr. O'Callaghan specializes in Board effectiveness and director recruitment in the public, private and not-for-profit sectors. Since 1992, Patrick O'Callaghan & Associates has provided Board governance advice to organizations in a wide range of industries throughout Canada, including assignments with federal and provincial crown corporations. Mr. O'Callaghan is a frequent speaker and seminar leader on corporate governance issues. He has first-hand experience as a director of public and private Canadian corporations and several not-for-profit organizations. Currently, Mr. O'Callaghan is a director of Women on BoardTM and a member of the Directors Advisory Group of the Canadian Institute of Chartered Accountants.
Sarah E. Raiss, B.Sc., M.B.A.
Executive Vice President, Corporate Services of TransCanada Corporation, Ms. Raiss is responsible for human resources, information systems, aviation, real estate and corporate services at TransCanada Corporation. Prior to holding this position, she was President of S. E. Raiss Group, Inc.; Vice President of Customer Service, Training and IT Support at Ameritech; Senior Consultant at Metzler and Associates; as well as holding various positions in engineering and operations with Michigan Bell.
Raymond Royer, L.L.B., M.A.
Director and retired
President and CEO, Domtar Inc., Before his appointment at Domtar, Mr. Royer was President and Chief Operating Officer at Bombardier. He is noted for his outstanding financial management and his ability to integrate acquired businesses through a management system that engages employees.
Appendix Three: Recommended Salary Ranges and Performance Awards
| Level | Current 2008-2009 | Recommended 2009-2010 | ||||
|---|---|---|---|---|---|---|
| Salary Range Maximum | Maximum At Risk Pay | Maximum Bonus | Salary Range Maximum | Maximum At Risk Pay | Maximum Bonus | |
| EX-1 | 115,400 | 12.0 % | 3.0 % | 117,200 | 12.0 % | 3.0 % |
| EX-2 | 129,400 | 12.0 % | 3.0 % | 131,400 | 12.0 % | 3.0 % |
| EX-3 | 144,800 | 12.0 % | 3.0 % | 147,000 | 12.0 % | 3.0 % |
| EX-4 | 166,200 | 20.0 % | 6.0 % | 168,700 | 20.0 % | 6.0 % |
| EX-5 | 186,200 | 20.0 % | 6.0 % | 189,000 | 20.0 % | 6.0 % |
| DM-1 | 208,300 | 20.0 % | 6.0 % | 211,500 | 20.0 % | 6.0 % |
| DM-2 | 239,600 | 25.0 % | 8.0 % | 243,200 | 25.0 % | 8.0 % |
| DM-3 | 268,300 | 25.0 % | 8.0 % | 272,400 | 25.0 % | 8.0 % |
| DM-4 | 300,400 | 30.0 % | 9.0 % | 305,000 | 30.0 % | 9.0 % |
| Level | Current 2008-2009 | Recommended 2009-2010 | ||||
|---|---|---|---|---|---|---|
| Salary Range Maximum | Maximum At Risk Pay | Maximum Bonus | Salary Range Maximum | Maximum At Risk Pay | Maximum Bonus | |
| Level 1 | 79,900 | 10.6 % | 3.0 % | 81,100 | 10.6 % | 3.0 % |
| Level 2 | 91,800 | 10.6 % | 3.0 % | 93,200 | 10.6 % | 3.0 % |
| Level 3 | 105,900 | 10.6 % | 3.0 % | 107,500 | 10.6 % | 3.0 % |
| Level 4 | 121,700 | 10.6 % | 3.0 % | 123,600 | 10.6 % | 3.0 % |
| Level 5 | 140,000 | 10.6 % | 3.0 % | 142,100 | 10.6 % | 3.0 % |
| Level 6 | 160,900 | 17.4 % | 6.0 % | 163,400 | 17.4 % | 6.0 % |
| Level 7 | 185,100 | 17.4 % | 6.0 % | 187,900 | 17.4 % | 6.0 % |
| Level 8 | 212,700 | 17.4 % | 6.0 % | 215,900 | 17.4 % | 6.0 % |
| Level 9 | 244,600 | 17.4 % | 6.0 % | 248,300 | 17.4 % | 6.0 % |
| Level 10 | 281,300 | 20.4 % | 8.0 % | 285,600 | 20.4 % | 8.0 % |
| Level | Current 2008-2009 | Recommended 2009-2010 |
|---|---|---|
| Level 1 | 88,100 | 89,500 |
| Level 2 | 101,200 | 102,800 |
| Level 3 | 116,800 | 118,600 |
| Level 4 | 134,200 | 136,300 |
| Level 5 | 154,400 | 156,800 |
| Level 6 | 188,900 | 191,800 |
| Level 7 | 217,300 | 220,600 |
| Level 8 | 249,700 | 253,500 |
| Level 9 | 287,200 | 291,600 |
| Level 10 | 338,700 | 343,800 |
| Level | Job Rates | Maximum Performance Award |
|---|---|---|
| Group 1 | 134,700 | 15.0 % |
| Group 2 | 161,600 | 15.0 % |
| Group 3 | 193,900 | 15.0 % |
| Group 4 | 232,700 | 26.0 % |
| Group 5 | 279,200 | 26.0 % |
| Group 6 | 335,000 | 28.0 % |
| Group 7 | 402,000 | 28.0 % |
| Group 8 | 482,400 | 33.0 % |
| Level | Job Rates | Maximum Performance Award |
|---|---|---|
| Group 1 | 136,800 | 15.0 % |
| Group 2 | 164,100 | 15.0 % |
| Group 3 | 196,900 | 15.0 % |
| Group 4 | 236,200 | 26.0 % |
| Group 5 | 283,400 | 26.0 % |
| Group 6 | 340,100 | 28.0 % |
| Group 7 | 408,100 | 28.0 % |
| Group 8 | 489,700 | 33.0 % |
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