The main components of the Executive Compensation Program that we propose are as follows:

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1 March 12 th, 2018 To: Members of the Community The Government of Ontario has asked the Board of Trustees of each parapublic sector employer to develop a compensation framework that ensures accountability and transparency in matters of executive compensation. The Government of Ontario s Broader Public Sector Executive Compensation Act, 2014 (BPSECA or the Act) and Ontario Regulation 304/16 and 187/17 apply to all designated public sector employers, including universities, colleges, hospitals and school boards. Each of these institutions is required to develop a detailed executive compensation program proposal to provide a framework for managing executive compensation in its respective institution. The Act therefore applies to Hôpital Montfort as well. The Board of Trustees of Hôpital Montfort has developed a compensation framework consistent with the intent and objectives of the Ministry of Health and Long-Term Care (the Ministry) and the Treasury Board Secretariat. This work was performed in consultation with Mercer (Canada), an independent firm specializing in compensation services. The detailed executive compensation framework proposal developed for Montfort is based on a reasonable approach and a solid rationale. Executive salaries at Hôpital Montfort have remained the same since 2010, even though the cost of living has increased by more than 12 per cent in Ontario over the same period. Following analysis and based on the Mercer recommendations, we have developed a fair and responsible compensation framework. The framework reflects the need to effectively manage remuneration costs and attract innovative talent. The Board of Trustees must ensure that Montfort remains Ontario s premier Francophone academic hospital, and that it can continue providing high-quality, safe care to all of our patients, for you and with you, in both official languages. The main components of the Executive Compensation Program that we propose are as follows: A framework that allows Montfort to remain a leader and retain its executives, in step with the market median; A salary structure that frames the base salary and performance-based components of Montfort executive compensation; A provision that will allow executives to receive salary increases at the same pace as other managerial personnel at the hospital.

2 We are satisfied with the meticulous procedure instituted with Mercer s support and validated by the Ministry. Ontario s Regulations provide that our framework must be submitted for a 30- day public consultation. After the consultation, and once feedback has been reviewed, the Executive Compensation Program will take effect. We would therefore ask you to forward your comments to gouvernance@montfort.on.ca by 3:59 p.m. on Friday, April 13, 2018, and include your name and contact information (telephone number and address). We are grateful to you for taking the time to share your opinion with us. Thank you, Suzanne Clément Chairperson, Board of Trustees Hôpital Montfort

3 Ian Cullwick Partner P R I V A T E & C O N F I D E N T I AL 55 Metcalfe Street, Suite 550 Ottawa, Ontario K1P 6L Fax Ian.cullwick@mercer.com Ms. Suzanne Clément Chair, Hôpital Montfort Board of Trustees Hôpital Montfort 713 Montreal Road Ottawa, Ontario, K1K 0T2 21 December 2017 Subject: Executive Compensation Framework In July 2017, Hôpital Montfort ( HM ) engaged Mercer (Canada) Limited ( Mercer ) to assist in the development of an Executive Compensation Framework, in compliance with the Broader Public Sector Executive Compensation Act ( BPSECA ). Given the strategic importance of this executive compensation strategy initiative, and with due regard to executive compensation governance best practices and the BPSECA requirements, our overall methodological approach included: Overall leadership from the Chair of HM s Board of Trustees; Active involvement and working sessions with the Executive Compensation Committee of the Board; "In Camera" documentation and Committee sessions with respect to CEO compensation; Separate and independent CEO participation with respect to broader executive compensation strategy design; Select contextual and internal governance working sessions with the CEO to confirm executive structure, core executive roles and accountabilities, delegated authorities, skill and competency profiles, applicable peer group definition and related total compensation comparative measurement and analysis; Examination of all aspects of total executive remuneration (base salary, variable performance pay, benefits and pension) both internally and in the context of the defined and applicable peer group; and Independent process support from the VP, Strategic Planning, Transformation and CHRO. Mercer was actively involved in all stages of this process, providing expert advice and guidance with respect to: the development of HM s executive compensation philosophy and peer group definition; conducting detailed analytical research and comparative data modelling related to pay cap determination; framework design and individual HM executive placement, and; supporting the briefing and presentation of framework recommendations to HM s governance leadership. Mercer (Canada) Limited

4 Page 2 21 December 2017 Suzanne Clément Hôpital Montfort Given the methodological approach, and with due regard to the BPSECA requirements, it is our opinion that the developed executive compensation framework reflects contemporary better practices for executive compensation governance and management (both in terms of process and outcomes), is based on a relevant and comparable set of peer organizations, and respects the spirit and intent of the BPSECA. Sincerely, Ian Cullwick Partner

5 Hôpital Montfort EXECUTIVE COMPENSATION PROGRAM Background In 2010, the Province of Ontario legislated a two-year compensation freeze for all non-unionized employees in the Broader Public Sector which prohibited increases to compensation including rates of pay, pay ranges, benefits, perquisites and other payments, but allowed for employees to progress through the ranks if their terms and conditions of employment included a salary grid. In 2012, the Province lifted the compensation freeze for all non-unionized employees but continued a freeze on all elements of compensation for designated executives and certain office holders, including performance pay envelopes. These compensation restraint measures continue to apply until an executive compensation framework becomes effective for an employer. In September 2016, the Executive Compensation Framework Regulation under the Broader Public Sector Executive Compensation Act (BPSECA) came into force. The intent of this Regulation is to ensure responsible and transparent administration of executive compensation in the Ontario broader public sector through the development of an approved executive compensation framework. Under BPSECA, a process was defined to develop an executive compensation framework that applies to designated executive positions at specific Ontario institutions. The framework must identify the executive positions, include the compensation philosophy, set salary and performancerelated pay caps and specify a maximum rate by which the total executive salary and performancerelated pay envelope could be increased. In determining the salary ranges and performance pay targets, the framework must be based on a comparable peer group that consists of a minimum of eight comparator organizations with specific rationale that explains why these specific comparator organizations were chosen. The salaries and performance pay for similar jobs at these comparator

6 organizations are then to be used to determine a contemporary executive compensation framework and to set the maximum rate of pay for executive roles and their respective incumbents. As per the Executive Compensation Framework Regulation under the Broader Public Sector Executive Compensation Act (BPSECA), the Board of Trustees of Hôpital Montfort has the lead responsibility for executive compensation philosophy framework development, including: Developing an executive compensation framework that meets the criteria specified above; Submitting the proposed framework to the Ministry of Health and securing its approval of the comparator organizations and of the proposed maximum rate of increase to its salary and performance-related pay envelope; After receiving approval by the Ministry to do so, seeking public comment by posting its proposed framework on its public-facing website for a minimum of 30 days; Submitting to the Ministry the summary of the public feedback received and any changes being made to the program; Approving the final Executive Compensation Framework and posting it on its website; and, Approving all wage increases for designated executives. Who We Are Located in Ottawa, Hôpital Montfort is Ontario s Francophone Academic Hospital, serving over 1.2 million people in Eastern Ontario, in both official languages. It has a mandate to provide a comprehensive range of medical services for both ambulatory and hospitalized patients. In 2014, it earned Accreditation with Exemplary Standing from Accreditation Canada, and was designated Best Practices Spotlight Organization by the Registered Nurses Association of Ontario. With its main partners, the University of Ottawa and the college La Cité as well as other post-secondary institutions, Montfort is preparing the next generation of francophone healthcare professionals. Since 2015, it has joined the ranks of Canada s Top 40 research hospitals through the activities of the Institut du Savoir Montfort, its knowledge institute. Montfort has a capacity of 289 acute care beds, including 97 in Medicine, 72 in Surgery, 27 in the Family Birthing Centre, 60 in Mental Health, 21 in Rehabilitation and 12 in Intensive Care. Montfort

7 also manages three satellite clinics: the Assertive Community Treatment (ACT) Team in Ottawa, Portobello Clinic in Orléans and the Prescott-Russell Community Mental Health Centre in Rockland. In addition, the hospital is responsible for a 127-bed Long Term Care facility and a 26-bed Withdrawal Management Centre. Montfort has more than doubled in size and in the number of programs it offers since 2010.The hospital is also involved in the development of innovative new partnerships and models of care, such as the one under planning for a Health Hub in Orleans. It is providing an increasing number of telemedicine and telehealth services to Francophone patients in the region and across Ontario. The hospital has a unique partnership with the National Defence of Canada and it hosts the Canadian Forces Health Services Centre Ottawa (CF H Svcs C (O)), the largest clinic of the Canadian Armed Forces (CAF). In June 2013, Hôpital Montfort received confirmation of its designation as an academic hospital. This mandate underscored that Hôpital Montfort is part of the solution for increasing access to health care in Ontario, especially by francophone communities. The Ministry and Hôpital Montfort are working together to develop this university teaching role more extensively and contribute to health care in Ontario, specifically in the following fields: Participating in planning and supporting French language health services, including clinical supports for patients and health professionals in communities across Ontario; Supporting the Government of Ontario in meeting its obligations under the French Language Service Act; Serving as a Centre of Excellence and hub for French language health care professional education, including ensuring the stability and coordination of French language clinical placements; Demonstrating research and academic programming consistent with an Academic Health Science Centre.

8 Designated Executives With such a diverse, complex mandate, Hôpital Montfort needs to attract and retain a strong executive team to continue to provide such a wide range of specialized services. In this regard, the proposed Executive Compensation Framework will apply to the six following designated executive positions at Hôpital Montfort: 1. President & Chief Executive Officer 2. Chief of Staff 3. Vice-President, Human Resources & Chief Transformation Officer 4. Vice-President, Clinical Programs & Chief Nursing Executive 5. Vice-President, Quality, Organizational Performance and Patient Support Services & Chief Information Officer 6. Vice-President, Performance, Corporate Services & Chief Financial Officer Compensation Philosophy As highlighted above, Hôpital Montfort must ensure it is able to provide a wide range of medical services to the Ottawa area residents, including Ontario the region s francophone population. In addition, as an academic hospital offering education and research services to the entire francophone healthcare medical community in Ontario, our executive compensation program must be designed to attract and retain highly qualified leaders with the necessary skills, qualifications and experience to lead a full-service hospital in both English and French. In support of this mandate and Hôpital Montfort s unique strategic context, the following principles were used to guide the design and governance of its executive compensation strategy: Aligns with and supports the mission and mandate of Hôpital Montfort, and enables values and principles; Optimizes the attraction and retention of key executive talent;

9 Provides for a total rewards strategy that includes the ongoing career development and engagement of executive leaders; Is externally equitable against a relevant set of peer organizations; Recognizes relative executive accountabilities, responsibilities, and job value (internal equity); Recognizes and is based on enterprise-wide team and individual performance; and, Supports a transparent and clear disclosure process that is respected by Hôpital Montfort s key stakeholders. Determining Compensation Levels Comparator Group While the legislation allows for comparison with any broader public sector organizations, the enterprise-wide comparator group for Hôpital Montfort was specifically selected from the health care sector, given the need to attract and retain specialized sector-specific skill sets. Further, given Hôpital Montfort s dual mandate as an academic hospital and a teaching hospital for Francophone health care professionals, a special focus was placed on comparable academic hospitals. Because of its close working relationship with the School of Medicine at the University of Ottawa, and given the University s status as a bilingual institution and its presence in the same region, a position from the School of Medicine was included in the group of comparators. The comparator peer group is also based on objectively measured criteria and qualitative considerations such as Hôpital Montfort s mandate and scope of programs and services, and its most likely competitors in the labour market for executive talent attraction and retention. Criteria were also developed to include hospitals that were similar in size (e.g. generally with an operating budget and a number of beds between half and twice our size). Comparable positions were chosen from these comparators that were generally similar with respect to core roles and responsibilities, essential competencies (knowledge, skills, abilities), relative complexity, and the level of accountability associated with the position.

10 To keep a balanced approach, giving the breadth and depth of our mandate, a variety of factors were considered, i.e. the type of operations we engage in; selecting organizations that also have a broad range of ambulatory, critical care and hospitalized patient services as well as teaching and research activities; the industries and the locations within which we compete for the talent; the size of the other organizations; as well as the scope of responsibilities of the organization s executives. To develop a comparator group encompassing our unique role and characteristics, we ensured that each selection would always meet at least 3 out of these 5 criteria. Following a robust analytical process, the following institutions were chosen to form our comparator peer group. Comparator Organization Bruyère Continuing Care Children s Hospital of Eastern Ontario Halton Health Care Kingston Health Sciences Centre Humber River Hospital Mackenzie Health North York General Hospital Royal Ottawa Health Care Group Mandate Summary A teaching hospital that provides sub-acute, geriatric and palliative care. Bruyère operates two long-term care facilities. An Ottawa-based pediatric health and research centre serving Eastern Ontario, Western Quebec, Nunavut and parts of Northern Ontario. A blending of three well-established, community-oriented hospital facilities providing community healthcare services. A teaching hospital providing complex-acute and specialty care and acuteambulatory care both secular and Catholic. A large regional acute care hospital with specialty programs and affiliated with the University of Toronto and Queen's. It is Ontario s first digital hospital. An acute care and community hospital. A leading community academic hospital offering acute care, ambulatory and longterm services. An academic health sciences centre that provides specialized mental health care, advocacy, research and education. Southlake Regional Hospital St. Joseph's Health Care, London St. Joseph's Health Care, Toronto A major teaching and research hospital. A teaching and research centre providing services in acute/ambulatory care, complex care and veterans care, long-term care, rehabilitation and specialized geriatrics and specialized mental health care. A community teaching hospital, providing care in areas such as emergency care, medicine, family birthing, surgery, and mental health. Toronto East General University of Ottawa - School of Medicine Full-service community teaching hospital providing acute care, rehabilitation, complex continuing care and mental health services. An academic health sciences faculty fully affiliated with Hôpital Montfort, providing specific teaching expertise.

11 Executive Compensation Framework Based on the analysis of related executive compensation pay practices across the identified peer group comparators, contemporary executive pay structures (minimum to maximum base salary ranges), and with due regard to the BPSECA regulations, the following Executive Compensation Framework is recommended for adoption. As summarized below, this framework consists of three tiers of pay with specific executive position placement based on relative levels of accountability and job value (internal equity), and peer group practices. Pursuant to the Regulations, the maximum salary and performance-related pay caps for each of the three tiers and designated executive positions are based on the 50th percentile of comparator peer group total cash (base salary plus variable performance pay) compensation practices. Tier of Pay Classes of Positions Designated Executives Minimum Base Pay Maximum Base Pay Pay for Performance (% of Base) Maximum Pay With Pay for Performance (50 th percentile of comparators) 1 Chief Executive Officer President & Chief Executive Officer (CEO) $ $ % $ Top Medical Executives Chief of Staff * $ $ % $ Top Clinical Executives - not an MD / Top Nursing Executives; Top Information Technology Executives; Top Finance Executives; Top Human Resources Executives; General Executive Officers VP, Human Resources & Chief Transformation Officer VP, Clinical Programs & Chief Nursing Executive VP, Quality, Organizational Performance and Patient Support Services & Chief Information Officer VP, Performance, Corporate Services & Chief Financial Officer $ $ % $ * All salaries show in the table above are annualized. The Chief of staff works only on a 0,6 FTE.

12 Designated Executive Salary and Performance-Related Pay Envelope Hôpital Montfort s total executive pay envelope for the last complete year was $1,471,465. Conversion to the proposed Executive Compensation Framework will represent a maximum of 5,0% increase to the previous total executive pay envelope. The maximum rate of increase to the compensation envelope was determined based on appropriate incumbent base salary range placement, based on competency, performance, and tenure. Conversion costs to implement the developed Executive Compensation Framework (and related rate of increase to the compensation envelope) are based on the following adjustments: Adjusting applicable incumbents to at least the new salary range minimum. Additional individual salary adjustments, based on executive competency profiles, performance, and tenure will be applied to allow for movement within the range progressing toward the new maximum. Where incumbents are currently compensated above the proposed new maximum, total compensation envelopes will be adjusted in accordance with BPSECA legislation and brought into alignment within 3 years. An adjustment to allow for full performance-related pay payouts related to Hôpital Montfort s fiscal performance year. The proposed rationale takes into consideration the five factors outlined in Section 3.3 of the BPSEC Framework Regulation: 1. The financial priorities and the compensation priorities of the Government of Ontario, as indicated in the Speech from the Throne, the Budget, the Economic Outlook and Fiscal Review, and the public documents of the Crown in right of Ontario, the Cabinet, the Treasury Board and the Management Board of Cabinet.

13 Montfort s framework has been developed to comply with these legislative requirements to ensure an alignment with the Government's priorities. To further support the government priorities, the new program will include a Short-Term Incentive (STI) component which is better aligned with labour market best practices pertaining to executive compensation. Montfort used a peer group that encompasses essential criteria and allows for a balanced approach to reflect its unique mandate. Montfort is matching its comparators where it does attract and loses talent from and with similar organizations in terms of executive compensation program and salaries to ensure durable accountability and maximum performance. The government is allowing increases in executive compensation but this should be done incrementally rather than an immediate increase to new maximum salary levels. After the salaries freeze of 2010, Montfort is proposing a reasonable adjustment of 5,0 % adjustment and a framework that is comprehensive, accountable to the public and governed by all applicable legislations. 2. Recent executive compensation trends in the part of the Canadian public sector and broader public sector that is in the industry within which the designated employer competes for executives. Based on research that Mercer conducts annually in the Canadian marketplace, the broader public sector is adapting its compensation in order to make executives more accountable in their actions and to create a more cost-effective approach to remuneration. Considering the trends in the public and private sectors, and the fact that many of Montfort executives can be mobile across sectors, it is paramount to attract and retain bilingual talent, remain effective, and attain results in the set terms and deadlines. There is an upward trend when we look at the broader public sector compensation, and Montfort must follow this trend in order to attract and retain key talent. Hospital executive salaries have been frozen since A comparison between the percentage of the designated employer s operating budget that is used for executive salary and performance-related pay and the percentages of the operating budgets of the designated employer s comparator organizations under section 3

14 that are used for executive salary and performance-related pay. Percentage of designated employer s operating budget for executive salaries and performance-related pay were used to determine the new compensation framework for Montfort. The average and median ratio of the operating budget related to executive compensation for our peer group is 0.78%. In comparison, Montfort s new framework has an operating budget designated for executive salary and performance-related pay of 0.68% which includes the 5% proposed adjustment to its executive compensation envelope. 4. The effect on attracting talent to the designated employer s executive positions, and retaining talent in the designated employer s executive positions, of the difference between the salary and performance-related pay range for those positions and the salary and performance-related pay ranges for the employees or office holders who directly report to the holders of those positions. Montfort s Board of Trustees developed its framework based on a solid knowledge that the need to attract and retain the right executive talent was an essential condition to the realization of its mandate. When recruiting for bilingual executives, there is competition from throughout the province and at times, even from outside of Ontario. The methodology and guidance brought forward by our consultants Mercer resulted in a coherent and cohesive three-tier compensation structure, with a range considered appropriate to recruit the executive talent. Of additional relevance, the compression that exists between the compensation provided to designated executives relative to the compensation provided to employees who directly report to them must be considered for its effect on attracting and retaining talent. The Board of Trustees believes that maximum rate of increase will enable

15 the hospital to make some necessary improvements to this compensation compression and thereby help to mitigate this attraction and retention risk. 5. Any significant expansion in the operations of the designated employer that is not the result of a significant organizational restructuring. Montfort went through several significant expansions in the last decade. First, following a major renovation and expansion project, Montfort almost doubled its number of hospital visits, services and staff. With a larger building and larger workforce, an increased mandate, a new status as an academic hospital, new sub-entities in the community, and a unique partnership with the National Defence all of these accomplishments achieved during the executive compensation freeze period the role of the executive team at Montfort is now much more complex than it was during the previous decade. Montfort went through this significant expansion and designation as a Group A academic hospital, while maintaining fiscal health and reducing the size of its executive team from eight to six executives. Montfort has been successful in providing high quality patient care, as validated externally through surveys, inspections and accreditations, including an Accreditation with Exemplary Standing with Accreditation Canada. However, to date these significant changes have not resulted in commensurate adjustments to executive-level compensation. The Board of Trustees believes that the proposed Executive Compensation Program is necessary, reasonable, and appropriate to compensate executives for the complexity of their roles and the language and skills sets required for the positions. Other elements of compensation Montfort has one harmonized benefit plan offered to both designated executives and non-executive managers. However, a few differences were identified in the cost sharing of the premiums. Recognizing that a difference in the benefits premium arrangement between designated executives and non-

16 executive managers may be interpreted as not being in the same manner and relative amount, the hospital will address these differences by harmonizing the levels. There are no other elements of the compensation that Montfort will offer to the executive group that will not also be offered to the non-executive managerial group by the third anniversary of the posting of this Executive Compensation Program. This review and analysis of the Montfort Executive Compensation program was done by Mercer Canada following a request from the Board of Trustees of Hôpital Montfort.