Ryerson University Executive Compensation Program

Transcription

1 Executive Compensation Program Approved by Ministry of Advanced Education and Skills Development (MAESD) for Public Consultation April 2018

2 Table of Contents Introduction... 3 A. Compensation Philosophy... 5 B. Designated Executive Positions... 8 C. Salary and Performance-related Pay Caps... 9 D. Salary and Performance-related Pay Envelope E. Other Elements of Compensation... 18

3 Introduction Ryerson University s highly differentiated academic, research and innovation mission and its partnerships with industry and the community, make it a university of choice in Canada. Its significant growth, size, highly diverse student population and location in the center of Canada s largest city provide a distinct complexity to the demands placed on our leadership positions. An executive compensation program that is performance oriented, aligned with Ryerson s vision and values and is competitive with those in comparator organizations across Canada is key to enabling the continued attraction and retention of high quality executives who can steward Ryerson s unique complexity and growth. The Ryerson Context Ryerson University s vision is to be Canada s leading comprehensive innovation university, a leader in high-quality, career-related education fostering innovation and entrepreneurship. With a mission to serve societal need, and a long-standing commitment to engaging its community, Ryerson offers more than 112 undergraduate and graduate programs in the Faculties of Arts; Communication & Design; Community Services; Engineering and Architectural Science; Science; and the Ted Rogers School of Management. Distinctly urban, culturally diverse and inclusive, the university is home to more than 44,000 students, including 2,600 master s and PhD students, over 4,000 faculty and staff and more than 180,000 alumni worldwide. The G. Raymond Chang School of Continuing Education is Canada s leading provider of university-based adult education. 55 career-oriented graduate programs, including 15 at the doctorate level, are being offered through the Yeates School of Graduate Studies. Ryerson has the highest number of first-choice applications in Ontario relative to undergraduate spaces available. The university is guided by a bold Academic Plan, an ambitious research agenda and a Master Plan to revitalize the campus and the neighbourhood. Our Time to Lead: Academic Plan draws on Ryerson s evolution as a builder, connector and innovator. It outlines four priorities: greater student engagement and success through exceptional experiences; increased scholarly, research and creative activity; fostering an innovation ecosystem; and expanding community engagement and city building. Diversity is a quality and imperative that distinguishes Ryerson from most Canadian universities. More than 80 languages are spoken on campus, and 55% of our students identify as visible minorities. Equity, diversity and inclusion are core values of the university s Academic Plan and are championed by a newly appointed vice president of equity and community inclusion, one of the first universities in Canada to have an executive position accountable for equity. Ryerson University s Mission, Mandate and Vision set the context for the Executive Compensation Program. Vision Ryerson University will be a comprehensive innovation university, recognized as a national leader in high-quality professional and career-related bachelor, masters, and doctoral programs, Page 3

4 and relevant research. It will be a global leader in interdisciplinary, entrepreneurial zone learning. Ryerson s students, graduates, and faculty will contribute significantly to Ontario s and Canada s economic, social, and cultural well-being. Mission The special mission of Ryerson University is the advancement of applied knowledge and research to address societal need, and the provision of programs of study that provide a balance between theory and application and that prepare students for careers in professional and quasiprofessional fields. As a leading centre for applied education, Ryerson is recognized for the excellence of its teaching, the relevance of its curriculum, the success of its students in achieving their academic and career objectives, the quality of its scholarship, research and creative activity and its commitment to accessibility, lifelong learning, and involvement in the broader community. (Ryerson University Mission Statement, 1994). Mandate Ryerson University is a leading institution of innovation and entrepreneurship that responds to societal need through high-quality, professional, and career-related bachelor, masters, and doctoral programs, and relevant scholarly, research, and creative activities. Ryerson is student focused, providing an emphasis on experiential learning, creativity, entrepreneurship, adult learning, and transfer pathways from colleges and other universities. Ryerson is an inclusive, diverse learning community. In its role as a City Builder, located in Canada s largest city, Ryerson enhances access and civic engagement, and has a positive, transformative effect on its neighbourhood and the broader community. Page 4

5 A. Compensation Philosophy Compensation Guiding Principles The following principles support the design of Ryerson s executive compensation program: Alignment with strategies and values: Support the advancement of the University s mission, goals, values and strategic priorities through the recruitment and retention of innovative top talent. The executive compensation program is designed to support the attraction of talent that can deal with the complexity of the institution as well as advancing Ryerson s strategic priorities as outlined in its Academic Plan and in the Strategic Mandate Agreement (SMA) negotiated with the Ministry of Advanced Education and Skills Development. The SMA articulates the specific ways in which Ryerson builds on its strengths to achieve its vision and to help drive system wide objectives and government priorities. Progress towards achievement of the priorities contained in the Academic Plan and the SMA is measured and reported on annually. These strategic priorities form the basis for annual goals and priorities set for each member of the executive team. The President s goals and priorities are set by the Chair and Vice Chair of the Board in discussion with the President. The goals and priorities of each executive member are established in consultation with and approved by the President and are shared with the Audit Committee of the Board. Performance oriented: Recognize and differentiate rewards based upon a holistic assessment of individual contributions to the overall success of the University. We seek to attract and retain the very best executive talent and our expectations of our leadership team are high both in terms of performance and in demonstrating Ryerson s core values. All designated executives participate in the annual performance pay program which aligns the executive with the key strategies, values and results of the University. The Chair and Vice Chair of the Board complete an annual assessment of the President s performance which is submitted to the Audit Committee. The President conducts annual assessments for each executive member. Compensation decisions for each executive member are approved by the Audit Committee of the Board. Accountability to stakeholders: The executive compensation program is designed to support appropriate balance among the interests and requirements of our key stakeholders (e.g., students, employees, government, industry partners, community, etc.). Flexible: Allow for adjustments to compensation to be responsive and adaptive to the ever-changing internal and external environments. Page 5

6 Simple and transparent: Be clear, understandable and transparent to our stakeholders so that the purpose and value of each component of our compensation programs is understood. Competitive positioning: Position compensation to enable the University to compete successfully for top tier executives with the mix of specialized knowledge and skills vital to its mission and strategic direction. Offer competitive compensation packages to be able to attract and retain executives in the GTA market, which presents unique characteristics with regards to housing costs and strong competition for talent by a variety of organizations within the post-secondary and broader public sector. Internal relativity: Consider both external competitiveness and relativity amongst individual executives of similar scope and complexity. Holistic: Recognize the importance of the total package of all monetary and nonmonetary rewards in attracting, retaining and engaging top-tier senior executives. Total Compensation Ryerson s compensation approach is based on the total compensation philosophy (base salary, performance pay and other compensation). Overall compensation opportunities for designated executives are established for positions with similar reporting relationships and scope of responsibility. The maximum cash compensation (salary and performance/variable pay) is targeted at the 50 th percentile (P50) of the comparator group, in compliance with legislated requirements. Ryerson s compensation program has the following elements: Base Salary Annual base salary compensation is initially determined by reference to the relative market cash compensation, internal equity, and the incumbent s previous experience and competencies relevant to the role. Annual changes to base salary consider legislative compliance, affordability, the performance of the incumbent and the relative competitiveness of their compensation within the limits of the established pay caps. Pay at Risk (Performance based pay) Each executive has a portion of their total compensation at risk for performance. Performance pay is based on a percentage of base salary, with the maximum percentage of at risk pay being 10%. Performance pay is re-earnable each year and does not form a part Page 6

7 of the base pay. The maximum total compensation, including performance pay, is capped at the 50 th percentile for each position as outlined in Section 3: Structure. The amount of performance pay earned annually is based on the achievement of predetermined goals and priorities as set by the Board Chair and Vice Chair for the President and by the President for the other designated executives. Actual Performance Pay awards are approved by the Audit Committee and cannot exceed the maximum defined in this framework. Other compensation (benefits and pension) Benefits and pension provided to the designated executives are the same as provided to other non-designated senior managers. In the few cases where differences exist, they are required for the performance of the position or for critical business reasons and are outlined in Part E of this document. Page 7

8 B. Designated Executive Positions Ryerson s designated executives are: President and Vice-Chancellor Provost and Vice-President, Academic Vice-President, Research and Innovation Vice-President, University Advancement and Alumni Relations Vice-President, Administration and Operations Vice-President, Equity and Community Inclusion Chief Financial Officer General Counsel and Secretary of the Board of Governors Page 8

9 C. Salary and Performance-related Pay Caps 1. Comparator Selection The comparator organizations were selected to reflect the University s labour market for executive talent and organizations that have executives with comparable responsibilities. The five factors outlined in the Regulation were taken into consideration in determining the appropriate comparators. Ryerson s location in the downtown core of Canada s largest urban centre is a key consideration in the selection of appropriate comparators. Operating a university within a large city creates unique complexities that do not exist in universities operating in smaller centres; this is reflected in the level of sophistication and skill required from our executives. More importantly, the significantly escalated housing costs in Toronto are a key consideration in comparator selection for compensation purposes. We have therefore given particular emphasis to selection of comparators located in medium to large urban centres. Although Ryerson regularly considers and recruits candidates for academic roles from Universities around the world, our primary market for executives and senior leaders ranges across Canada. To reflect the balance of the national pool for university executives, we have selected 8 Canadian universities, from across the country as comparators for our executive positions. Canadian University Comparators The 8 Canadian universities have been selected as appropriate comparator organizations based on a combination of the following factors: Location of the Organization: All of the comparators are located in medium to large size urban centres. Ryerson University is located in downtown Toronto, in the centre of the Greater Toronto Area (GTA), and as such must offer compensation to attract and retain talent both locally and from across the country and beyond. The large concentration of post-secondary, broader public sector and private sector opportunities within Toronto, coupled with housing costs that are amongst the highest in the country forces Ryerson to offer highly competitive compensation in order to attract and retain suitably qualified candidates, and to offer a compensation package that allows new executives transferring from outside of the GTA to obtain appropriate housing in Toronto s inflated market. The scope of responsibilities of the specific comparator for each of the above named positions at these universities is similar. Titles and reporting relationships of individual comparator positions are the same or similar to those at Ryerson. Type of Operations the Organization Engages In: All are publicly funded Canadian universities offering undergraduate and graduate education. Industries Within Which the Organization Competes for Executives: Comparator organizations recruit candidates for executive positions from a comparable group of universities across Canada. Page 9

10 Size of the Organization: The number of students served is generally within a range from half to about two times that of Ryerson. The 8 Canadian universities used as comparators are: 5 universities from Ontario, two specifically from the GTA: York University, University of Toronto, McMaster University, University of Waterloo, University of Western Ontario While the University of Toronto (U of T) is larger than Ryerson University, as a university similarly located in downtown Toronto it is traditionally used as a comparator for Ryerson in terms of many of the programs we offer, as well as with respect to compensation. We compete with U of T in recruiting senior leaders, including, for example, our most recently recruited Vice-President, Advancement and Alumni Relations, who joined Ryerson from U of T in universities from outside of Ontario, from both Western and Eastern provinces: University of Alberta, University of Calgary, and McGill University. These universities are used as comparators to represent large urban universities in Canada. A further factor in the selection of the universities outside of Ontario was the availability of publicly disclosed compensation data from these provinces and organizations. The universities selected were those for which executive compensation data was available. Positions used for comparison The President and Vice Chancellor is a well-established role with readily identifiable benchmarks within the selected Canadian universities (President of university). The Provost and Vice-President, Academic is a well-established role with readily identifiable benchmarks within the selected Canadian universities (Provost). The Vice-President, Research and Innovation is a well-established role with readily identifiable benchmarks within the selected Canadian universities (VP of Research). The Vice-President, University Advancement and Alumni Relations is a well-established role with readily identifiable benchmarks within the selected Canadian universities (VP of Advancement). For the General Counsel and Secretary of the Board position all comparators are General Counsel roles, while some also hold similar dual responsibilities. The following three designated executive positions have been placed in one class of positions, reflecting their general alignment in terms of complexity and scope and resulting appropriate compensation. Canadian university sector data from the 8 universities described above was used to identify appropriate available market data to determine the market rate for these roles. The Vice-President, Administration and Operations (VP AO) is a well-established role with readily identifiable benchmarks within the selected Canadian universities (VP of Administration/Finance). Market data for this role has been collected and is used to determine the market pay level for the entire job class. The Vice-President, Equity and Community Inclusion is a new and important role, and is unique to Ryerson. No other Canadian university has a vice presidential role dedicated to Page 10

11 this portfolio alone and therefore there are no directly comparable positions. The complexity and scope of the role, and the level of skills and knowledge required to fulfill the responsibilities associated with the role, are closely aligned with the VP AO, therefore these positions have been placed in the same job class for compensation purposes. The Chief Financial Officer (CFO): As a result of a restructuring effective January 2018, the CFO role at Ryerson reports directly to the President and has therefore been identified as a designated executive. The CFO role as structured in Ryerson is uncommon among Canadian universities, where most CFO s report to a Vice President, and there are few directly comparable positions. The complexity and scope of the role, and the level of skills and knowledge required to fulfill the responsibilities associated with the role, are closely aligned with the VP AO, therefore these positions have been placed in the same job class for compensation purposes. Given the somewhat narrower scope of this position in relation to others in the class, the maximum compensation is aligned at 90% of the market P50. Page 11

12 2. Comparative Analysis Details Market data regarding comparator compensation was obtained from a variety of sources in order to gather sufficient information to determine market pay levels: Public Sector Salary Disclosure for Ontario universities captures salary and other T4 earnings for 2016 calendar year; Publicly available 2016 earnings data for Canadian universities outside of Ontario; generally captures salary and other T4 earnings for 2016 calendar year; COU salary survey data collected by Gallagher McDowall Associates. Ryerson retained Willis Towers Watson executive compensation consultants to support the data analysis and to provide advice on compensation program planning and design. The pay caps for each position ( maximum compensation ) were established in accordance with the Regulation based on salary plus performance pay (total compensation) within the comparator organization (the market). To establish caps, the University obtained data on 2016 earnings and established caps at the 50 th percentile of this data, meaning half the market had total compensation above these caps and half the market had maximum total compensation below the caps. Pay caps for each Ryerson executive position have been established after careful consideration of available market data, current compensation, and internal equity vs the relative complexity of each position. The summary comparator market analyses, showing the 50 th percentile for each position, are outlined in the following table. Table 2: Results of comparator market analysis Position Market P50 President and Vice-Chancellor $452,230 Provost and Vice-President, Academic $353,000 Vice-President, Research and Innovation $339,753 Vice-President, University Advancement and Alumni Relations $327,988 Vice-President, Administration and Operations $297,538 Vice-President Equity and Community Inclusion $297,538 Chief Financial Officer $267,784 General Counsel and Secretary of the Board of Governors $ 237,720 Page 12

13 3. Salary and Performance-related Pay Structure The University has adopted a performance-based pay program with a specified maximum percentage amount, in relation to each executive s salary, that is re-earnable based on the achievement of predefined performance objectives. This plan provides for a degree of variability in our overall compensation mix and directly aligns total executive compensation with the performance of the University and the contribution of the executive. The maximum bonus eligibility for any designated executive position is 10%. The amount of bonus allocated in any year depends on the degree to which the goals and priorities have been achieved or exceeded by each executive, balanced with the university budget constraints, applicable pay caps for each position and the available executive pay envelope for the given year. The following table indicates the proposed salary and performance-related pay cap for each position. Table 3: Proposed Salary and Performance-Related Pay Caps by Executive Position Maximum allowable total compensation (salary + bonus) President and Vice-Chancellor $452,230 Provost and Vice-President, Academic $353,000 Vice-President, Research and Innovation $339,753 Vice-President, University Advancement and Alumni Relations $327,988 Vice-President, Administration and Operations $297,538 Vice-President Equity and Community Inclusion $297,538 Chief Financial Officer $267,784 General Counsel and Secretary of the Board of Governors $ 237,720 Page 13

14 D. Salary and Performance-related Pay Envelope Ryerson s Pay Envelope The pay envelope is determined based on the total amount of actual salaries paid out and/or the maximum performance related pay opportunity for each designated executive for the most recently completed pay year. Ryerson has experienced an unprecedented change within the executive team, adding a level of complexity to the determination of the pay envelope. In determining the Salary and Performance Pay envelope for Ryerson, the following method was used: Ryerson pay year is defined as a July to June cycle; For designated executives who were in the role for the full 2016/17 year, actual salary and the maximum performance related pay opportunity in respect of the most recently completed pay year was used. This includes the President, the Vice-President, Administration and Finance and the General Counsel and Secretary of the Board of Governors. For executives in role for less than the full year, actual base and maximum performance pay opportunity have been annualized. This includes the Vice-President, Research and Innovation. For executives appointed after the end of the most recently completed pay year, actual base and maximum performance pay opportunity for the previous non interim incumbent was used, consistent with the requirements of BPSECA. This includes the Provost and Vice-President, Academic and the Vice-President, University Advancement and Alumni Relations. For newly created executive positions (new roles or restructured roles) put in place either just before, or after the end of the most recently completed pay year, base pay and maximum performance pay opportunity have been allocated in the envelope as per employment contracts, the internal benchmarks and current BPSECA requirements. This includes the Vice President, Equity and Community Inclusion and the Chief Financial Officer. Page 14

15 Table 4: Ryerson s pay envelope for Executives Total Cash Compensation (base salary and performance-related pay) President and Vice-Chancellor $410,475 Provost and Vice-President, Academic 1 $350,000 Vice-President, Research and Innovation 2 $316,680 Vice-President, University Advancement and Alumni Relations 3 $346,267 Vice-President, Administration and Finance 4 $300,000 Vice-President, Equity and Community Inclusion 5 $300,000 Chief Financial Officer 6 $269,597 General Counsel and Secretary of the Board of Governors 7 $212,850 Total Pay Envelope $2,505,869 1 In , Ryerson did not have a permanent Provost and Vice-President, Academic, therefore, the last available compensation data for a permanent Provost was used to reflect this position. New permanent incumbent started July 1, salary data for the Vice-President, Research and Innovation has been annualized based on the 3 months worked by the new permanent incumbent 2017; the bonus figure reflects the maximum amount of performance related pay the incumbent could have received in accordance with his contract. New incumbent started April 1, In , Ryerson did not have a permanent Vice- President, University Advancement and Alumni Relations, therefore, the last available compensation data for a permanent VP UA was used to reflect this position. New incumbent started July 31, Title changed to Vice-President, Administration and Operations effective January 29, The Vice-President, Equity and Community Inclusion is a new appointment and is eligible for a bonus; table shows compensation as approved by the Audit Committee. New appointment started May 1, The CFO is a new appointment; table shows planned annual compensation (base plus max performance pay available). New appointment started in January The General Counsel and Secretary of the Board of Governors currently receives an additional non base annual stipend of $79,000 as Special Advisor for the Law Practice Program. These responsibilities are unrelated to and separate from her role as General Counsel and Secretary to the Board and therefore not included in the pay envelope. Page 15

16 Maximum Rate of Increase to the Pay Envelope We propose a maximum rate of annual increase to the overall pay envelope of up to 4.5% based on consideration of the following factors: In the 2016 Speech from the Throne the Government signaled a balanced approach to eliminating the deficit and, in the 2016 Ontario Economic Outlook (p. 2), a commitment to continue to provide effective and affordable public services while recognizing the need for fair compensation (p. 105). In the 2017 Ontario Budget the Government projects a balanced budget, with more money to invest in healthcare, education and other public services (p. 3). At p.145 of the Budget the Government states that it is committed to ensuring that Ontario s postsecondary education system remains highly competitive. The 2016 Ontario Economic Outlook cited average annual increases from 2012 to 2016 in the provincial public sector of 0.6% as compared to average annual increases during that period ranging from 1.9% in the private sector to 1.7% in the municipal and federal public sectors (p. 105). During this same period salaries for designated executives at Ontario universities were frozen. Real GDP growth and CPI inflation is expected to be modest at 2.25% and 2% on average, respectively. During the period from 2010 to 2016, CPI increased at a compounded rate of 12.17%. The compensation of Ryerson s designated executives was frozen during this period and has therefore actually decreased in purchasing value since During the period from 2012 to 2017 similar inequities have developed at Ontario universities, including Ryerson: o Ryerson faculty received negotiated increases totaling 27% during this period (cost-of-living of 12% plus annual career increment; not compounded) while the salaries of those to whom they ultimately report were frozen. o Similarly, negotiated salary increases during this same period for other unionized groups at Ryerson were between 25-30%, including the annual step increases. Ryerson requires sufficient flexibility to address inequities and market competitiveness. The ability to provide reasonable annual increments for executives to gradually address this growing internal imbalance is critical to ensure equitable salary differentials. In the last 4 years the average actual across-the-board plus step/progress-through-therange/merit increases for the three largest employee groups at Ryerson have been as follows: o o o Faculty: 4.4% each year Staff (OPSEU): 4.6% each year Management & Confidential: 3.4% each year (limited by BPSSA pay envelope restrictions). These figures provide an indication of the reasonable, equitable annual increase range for executives moving forward just to maintain current internal relative salaries. Page 16

17 The regulation references significant expansion in the operations of the designated employer as a factor in determining the maximum rate of increase to the pay envelope. Ryerson has experienced significant and rapid growth over the past years: o 51% increase in student enrolment over the past 10 years o 65% increase in research funding over the past 5 years o 78% increase in first choice applications and all-choice applications since 2004 o 55% increase in international students over the past 10 years. Looking forward, Ryerson is planning significant and strategic expansion in the next few years in several key areas: o Establishment of a Law School o Expansion to the City of Brampton, in partnership with Sheridan College o Establishment of the Ryerson Institute for Labour Market Information o Expansion of the innovation ecosystem o Residence spaces on campus will more than double in The above factors demonstrate that Ryerson requires sufficient flexibility to maintain pace with expected compensation increases moving forward as well as to address some of the inequities that have emerged during the years of executive salary restraint since A maximum rate of annual increase to the overall pay envelope of up to 4.5%, although not necessarily fully utilized each year, will allow for annual economic and performance-based merit increases for executives that are aligned with the increases provided to Ryerson s non-executive managers while also allowing the Board of Governors the flexibility to gradually address, in accordance with the terms of the legislation, market competitiveness for those designated executives falling below the market median. This will help to ensure that Ryerson is well positioned to attract and retain the caliber of executives required to lead the continued growth and success of this complex and dynamic organization. Page 17

18 E. Other Elements of Compensation In addition to cash compensation, designated executives participate in the same benefit programs as non-designated managers. Where differences are proposed below, they are a requirement of the role or are critical to the organization. Car Allowance and Parking The President and Vice-Chancellor and the Vice-President, University Advancement and Alumni Relations are eligible to receive a car allowance and monthly parking as a requirement of their respective positions. The President s role is largely outward facing, requiring engagement with the external GTHA community on a daily basis. As such the President is required to have a vehicle at work and is required to attend frequent meetings at a variety of locations in the GTHA. The role of the Vice President, University Advancement and Alumni Relations is similarly outward facing, requiring frequent attendance at meetings at a variety of locations. For both positions the availability of a vehicle at work is a requirement of the position and critical to the successful performance of the role. Administrative Leave The President s compensation package includes the accrual of 1 year of administrative leave during the first 5 year term and eligibility to accrue a second year of administrative leave in the event of a second 5 year term. While the rate of administrative leave accrual during a first 5 year term is the same for all other academic administrative positions, the ability to accrue a second year of administrative leave during a second 5 year term is generally not provided to other academic administrators at Ryerson. This provision is, however, common for university presidents and indeed many other senior academic administrators within the Canadian academic market in which Ryerson competes for senior executives. It is critical that employment provisions at Ryerson be competitive with those at other universities. It should be noted that the President is an appointed faculty member and as such is expected to return to a faculty position upon the completion of the administrative leave period. Page 18