Executive Compensation Program

Provincial legislation background About McMaster University McMaster context Designated executives Comparable Institutions McMaster’s draft executive compensation program Your opportunity to provide comments

In 2010, the Ontario government introduced the Broader Public-Sector Accountability Act, 2010 (BPSAA) which included a series of regulations to control the compensation, expenses and perquisites for employees within the broader public sector. This resulted in a compensation freeze for executives in the broader public sector, including universities. McMaster had already frozen the compensation for its executives in 2009.

In 2014, the Government of Ontario approved the Broader Public-Sector Executive Compensation Act, 2014 (BPSECA) in order to manage executive compensation in the broader public service. In September 2016, the Government of Ontario introduced Regulation 304/16: Executive Compensation Framework, which was amended in November 2016, June 2017, and November 2017. These pieces of legislation outline the process that Ontario broader sector employers (including universities, colleges, hospitals, and school boards), are to use to create compensation frameworks for Designated Executive positions.

Highlights of the compensation framework for Designated Executive positions require that:

  • Salary and any performance-related pay be capped at the 50th percentile of appropriate comparators.
  • Designated Employers must receive approval from their overseeing Ministry on the comparator organizations used to determine the salary and performance-related pay caps.
  • The salary and performance-related pay envelope, and the rate of increase to be applied to this envelope, is to be capped at the maximum rate of increase approved by the overseeing Ministry.
  • Approval of the overseeing Ministry is required at multiple points through the process of creating the Executive Compensation Program.
  • Certain forms of compensation, such as signing bonuses, and pay-in-lieu of perquisites are prohibited.

The approval process for the compensation program requires that the draft plan be posted online for 30 days to provide the public with a reasonable opportunity to comment. The final Designated Executive Compensation Program must then be submitted to the government for final approval. Once final approval is received, the compensation envelope may be used to provide annual increases to Designated Executives.