WDMH Executive Compensation Plan January 22, 2018
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1 WDMH Executive Compensation Plan January 22, 2018 Introduction Hospital executive compensation has been frozen, in compliance with provincial legislation, since 2009 meaning no economic increases, no movement along wage/salary grids, no changes to benefits and no merit increases. Since that time, other hospital staff have received annual cost of living wage increases ranging from 0.5% to 2%. This is WDMH s proposed Executive Compensation Plan in accordance with the 2017 provincial regulation that allows increases according to a prescribed process. That regulation can be viewed at This plan has been endorsed by the WDMH Board of Directors and received preliminary approval from the provincial government. The plan may be modified based on feedback collected through this 30-day public posting period. It will then be re-submitted to the provincial government to seek final approval to implement the plan. Designated WDMH Executives At WDMH, there are three executive positions that are designated according to the regulation: 1. Chief Executive Officer 2. Senior Vice-President, Clinical Services & Chief Nursing Executive 3. Senior Vice-President, Corporate & Information Management Services & Chief Financial Officer. Executive Compensation Philosophy The Board of Directors recognizes the significant value of human resources in fulfilling its Commitment Statement, quality improvement initiatives and hospital priorities. One of the key components to ensuring success of the hospital is our people and investing in them. The Board of Directors wants to ensure that the compensation plan for its executives is current, competitive, in-line with current legislation, and appropriate to attract and retain the senior talent necessary to lead the organization to success. The hospital s compensation plan is designed to support the achievement of its operational goals and strategic objectives, with an emphasis on quality improvement. To ensure competitiveness within the Ottawa and Eastern Ontario job markets, WDMH executive salary ranges will be established using the 50th percentile (median) of comparator organizations. 1 P a g e
2 Comparator Organizations According to provincial regulation, WDMH is required to identify eight comparator organizations upon which to base any salary changes. For this purpose, WDMH can be defined by: Size of operation WDMH is a community hospital (according to government categories) Operational complexity WDMH is comparatively complex because of its academic programs that most other hospitals do not have: o WDMH is a teaching hospital with approximately 300 students per year o WDMH has a research program In addition: The CEO and CFO are accountable to three boards of directors -- WDMH, Rural Healthcare Innovations, and Dundas Manor Ltd. The Senior Vice-President of Clinical Services is responsible for all clinical, diagnostic and patient care services, which is unique among hospitals of this size or larger. This position is also lead executive for the local Health Link. When attempting to define a group of comparator organizations: There are similar-sized community hospitals that have nursing homes and/or multiple boards but do not have academic programs so are not as complex. Only hospitals that are considerably larger than WDMH have both teaching and research but because they are significantly larger, they do not seem valid as comparators. As such, the following comparators have been selected: Hospitals that are similar in size: o Northumberland Hills Hospital (Cobourg) o Hawkesbury and District Hospital o Leamington District Memorial Hospital Hospitals that have more than one corporation/board of directors: (comparable to WDMH and Dundas Manor): o Renfrew Victoria Hospital and St. Francis Memorial Hospital (Barry s Bay) o Carleton Place Hospital and Almonte General Hospital o Norfolk General Hospital (Simcoe) and West Haldimand Hospital Hospitals that are somewhat larger than WDMH to approximate greater complexity of operations: o Ross Memorial Hospital (Lindsay) o Pembroke Regional Hospital Hawkesbury, Renfrew/Barry s Bay, Carleton Place/Almonte and Pembroke also represent local job-market comparators. 2 P a g e
3 Salary Ranges based on Comparators The WDMH executive salary scale (below) was established in There have been no progressions along the scale (current salaries in bold). Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 CEO 200, , , , , , , ,000 Senior VPs 124, , , , , , , ,924 The following new minimums and maximums were calculated based on the 50 th percentile of salaries for the corresponding executive positions at the eight comparator hospitals; i.e., the CEO salaries were compared to each other among WDMH and the comparator hospitals, and similarly for the corporate vice-president and clinical vice-president positions. Chief Executive Officer Senior VP, Corporate & CFO Senior VP, Clinical & CNE Percentile values selected to calculate maximum salary 50 th 50 th 50 th Minimum salary 210, , ,858 Maximum salary 263, , ,317 This results in a new scale that moves salaries to the 50 th percentile level of comparators over three years. Final Current Year 1 Year 2 Year Chief Executive Officer 230, , , ,022 Senior Vice-Presidents 149, , , ,317 Executive Compensation Criteria and Pay Envelope According to the government regulation, the Executive Compensation Plan must include: Total executive compensation for the most recently completed year; Proposed maximum rate of increase to the envelope; Updated pay envelope (with the maximum rate increase applied); and Rationale for determining the maximum rate of increase to the envelope which must align with the government s priorities for managing public sector compensation based on the following criteria: 3 P a g e
4 1. The financial priorities and the compensation priorities of the Ontario Government. From the 2017 Ontario Budget: The government will continue to take a balanced approach to managing compensation. This approach will recognize the need to maintain a stable, flexible and high-performing public-sector workforce that supports the government s transformational priorities and at the same time ensures that public services continue to remain affordable. Over the upcoming year, negotiations will be undertaken within key areas of the public and broader public service, including health care, postsecondary education and social services. After being frozen since 2009, the government is allowing increases in executive compensation but should be done incrementally rather than an immediate increase to new maximum salary levels. 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. Hospital executive salaries have been frozen since However, over the past eight years, there have been regular salary increases throughout the Ontario public sector, including a continuation of merit increases, movement along salary grids and executive bonuses. Recent economic awards (i.e., in addition to progression along salary/wage grids) range from 1-2% annually, which represent increases to union wage grids. Since 2009, other hospital staff have received annual cost of living (COLA) increases of 0.5% to 2.0% (in addition to increases according to wage grids). This proposal for executive salary represent a smaller increase than the cumulative total of COLA increases awarded to other staff. 3. A comparison between the percentages 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 that are used for executive salary and performance-related pay. Current Executive Compensation comprises 1.2% of the current combined WDMH and Dundas Manor operating budgets and will be maintained. This information is not yet available for all comparator organizations. 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 4 P a g e
5 salary and performance-related pay ranges for the employees or office holders who directly report to the holders of those positions. When recruiting, there is competition from throughout Ottawa and Eastern Ontario in which there are approximately twenty hospitals and many more long-term care homes (as well as the Federal Government, which is a significant, high-paying employer). It is important that WDMH salary levels allow us to stay competitive and attract high calibre personnel. To remain competitive, an annual increase of 5% is proposed, which is within the range of typical salary grid intervals for WDMH non-union staff. 5. Any significant expansion in the operations of the designated employer that is not the result of a significant organizational restructuring. Performance - WDMH has been very successful in maintaining high quality of patient care and fiscal health, while having one of the smallest senior management teams of any Ontario hospital (i.e., only three positions for both hospital and nursing home organizations -- as well as being the lead agency for the local Health Link). : Over the past several years, many new patient care programs have been implemented in spite of annual government funding increases of 1% or less. A high-level of quality of patient care has been achieved and maintained - and validated externally through surveys, inspections and accreditations, including achieving Exemplary Standing with Accreditation Canada. WDMH has achieved a balanced budget for 12 consecutive years and has been the most-efficient/lowest-cost hospital in Eastern Ontario. Dundas Manor Long-Term Care Home will soon require the construction of a brand new building. This will represent a significant addition to executive responsibilities. WDMH executive salaries have had no adjustments or increases since 2009 and are significantly below the median level of comparator organizations. It is proposed that increases be implemented as below, which will move the executive salaries to the median level of comparators over a three-year period. Current Year 1 Year 2 Final Year Chief Executive Officer 230, , , ,022 Senior Vice-Presidents 149, , , ,317 5 P a g e
6 As such, the proposed rate of increase is: Total Executive Compensation for Most Recently Completed Pay Year Proposed Annual Rate of Increase (for three years) Updated Executive Compensation Pay Envelope $539, % $566,673 Other Elements of Compensation In accordance with the provincial regulation, WDMH executives do not receive: - Payments or other benefits in lieu of perquisites; - Signing bonuses; - Retention bonuses; - Cash housing allowances; - Insured benefits that are not provided to non-executive managers; - Paid administrative leave or payments in lieu of administrative leave - Any component of compensation that is unavailable to other WDMH managers Next Steps This plan has been endorsed by the WDMH Board of Directors and received preliminary approval from the provincial government. This plan will be posted for a 30-day period. Any comments can be forwarded (confidentially) to the Chair of the WDMH Board of Directors. Comments and feedback may be used to modify the plan, which will then be re-submitted for final government approval. Once final government approval is received, the plan will be implemented. 6 P a g e
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