Executive Compensation Program -- Draft for Consultation Compensation Philosophy Mohawk College s Executive Compensation Program is designed in compliance with the Government s new, mandatory policy, with a view to attract, motivate and retain highly qualified and accountable Designated Executives and align their efforts to support the achievement of the college s operating goals and strategic objectives. Please click on the following links for information on Mohawk College s Strategic Plan and 2016-2017 Business Plan. A third party expert in compensation practices was engaged by the College Employer Council on behalf of all Colleges in the province to provide expertise and knowledge to develop this Executive Compensation Program. In addition, Mohawk College s Executive Compensation Program has been developed with consideration of the core mandate of all 24 Colleges of Applied Arts and Technology in Ontario as articulated in the Ontario Colleges of Applied Arts and Technology Act, 2002 and also the relative scope and complexity of Mohawk College s operations in comparison with other colleges. Compensation is determined through an analysis of appropriate comparable positions at comparator organizations and an annual review of performance metrics. This Executive Compensation Program outlines the manner in which compensation is determined for Designated Executives, which consists of the following positions: President Vice President, Academic Vice President, Corporate Services Vice President, Student & Alumni Services Special Advisor to the President and Head, Public Affairs Chief Information Officer Chief Financial Officer In accordance with the Province s new framework, Mohawk College s Executive Compensation Program and the specific compensation levels for Designated Executives are required to be approved by the Mohawk College Board of Governors ( Board ). Page 1 of 10
Mohawk College s approach to the compensation of Designated Executives takes into consideration common and over-arching concepts and principles used across many sectors, geographies and functions when making compensation decisions. It is grounded in responsible compensation practices and is sensitive to: relevant markets relative to executive talent; equity and reasonability across the colleges; variation in an executive s experiences, skills and capabilities; as well as legislative compliance within the province. Mohawk College s compensation philosophy is aligned to its strategic mandate and reflects the accountabilities and complexities of the work of the Designated Executives required to achieve these strategic and operational objectives. Compensation is an important factor in the Mohawk College s ability to better attract, retain, and engage executive level resources from within the college sector across Ontario, as well as from a broader set of comparable public sector organizations. Consideration has also been given to the impact of the overall compensation structure within Mohawk College to ensure that issues of compensation compression are addressed. As part of the process to determine the compensation program for the Designated Executives, the Board has reviewed a number of objective measures of complexity and accountability that pertain to the Executives roles. The Board has reviewed these measures for Mohawk College in the context of its strategic and operational objectives and also assessed the relative complexity and accountability of Mohawk College in comparison to other colleges across Ontario. With the assistance of a third party compensation specialist, a sector-wide Complexity and Accountability Matrix was developed in order to have an objective approach to ranking individual colleges into one of five levels. This assessment consists of a review of the following core measures: Enrolment Revenue Staff complement In order to finalize the relative ranking, the Board received a further assessment of additional complexity and accountability factors of: Number and diversity of degree programs offered Applied research activity Page 2 of 10
Nature and complexity of particular types of enrolment, including first generation, aboriginal and/or special needs students, as well as the provision of clinical and cooperative/experiential programs Size, diversity and complexity of the geography in which the college is located. Colleges were assessed on a 5 point scale, with 5 being the highest and 1 being the lowest. Based on this analysis, the Board has assessed that Mohawk College is in level four of the five levels in terms of the relative complexity and accountability outcomes when compared to other colleges in Ontario. The combined maximum base salary and pay-at-risk level for Designated Executives is first determined using the criteria established by the Broader Public Sector Executive Compensation Act and Regulations. An analysis of compensation levels of similar positions in organizations that are comparable with respect to these complexity and accountability measures for Mohawk College is performed and refined by using the Complexity and Accountability matrix. The details of this comparative analysis are provided under section 2 and 3 of this compensation program. Compensation for Designated Executives includes a base annual salary plus an amount of performance pay that is at risk. Each year, 20% of the President s and 15% of the rest of the Designated Executives compensation is considered to be at risk and only paid out in total or in part after an evaluation of the performance of the executive against pre-established performance goals aligned with the college s strategic plan and operational goals. The Board, consistent with its responsibilities outlined under the Minister s Binding Policy Directive on Governance and Accountability Framework, conducts the annual performance review process for the President and the President conducts this process for the other Designated Executives, subject to the Board s oversight. Designated Executives also receive group health insurance benefits and pension coverage under a defined benefit pension plan on the same basis as non-executive managers at the college. All other compensation elements for Designated Executives are provided in the same manner and relative amount as that which is provided to non-executive managers at the college, unless the element is required for the performance of the executive s job or required for critical business reasons. Page 3 of 10
Comparators The maximum base salary and at-risk performance pay for Designated Executives is determined through an analysis of appropriate comparable positions at comparator organizations. All comparators are within the public sector in Ontario. An expert compensation consultant has assisted in identifying comparators that have provincial relevance for the college sector. In identifying comparable organizations for this analysis, the following factors have been reviewed as prescribed by Regulation 304/16 under the Broader Public Sector Executive Compensation Act: Scope of responsibilities of the organization s executives Type of operations the organization engages in Industries within which the organization competes for executives Size of the organization Location of the organization The organizations identified and the positions in those organizations that have been used in the comparator analysis have been identified because it has been determined that they require similar essential competencies (knowledge, skills and abilities) of leadership, relative to the types of complexities and the levels of accountabilities as required by our Designated Executives in order to achieve Mohawk College s strategic and operational objectives. The comparator analysis includes different types of public sector organizations across Ontario given that there are demonstrated examples of mobility within the college sector to different geographic locations in Ontario as well as movement from and to the college sector from these other types of public sector organizations. Care was taken to reflect specific examples where college executives had moved to or from organizations that could be comparable in size, but also might be bigger or smaller in size. Regardless of size, these organizations still utilize the transferrable leadership knowledge and skills required across these executive positions. This is why colleges recruit from these organizations and they recruit from the college sector. In developing this information, the analysis was based on transferrable positions. Positions that require a particular regulated profession or designation (e.g. physicians) have been excluded as not being comparable. Regulation 304/16 under the Broader Public Sector Executive Compensation Act, requires that this calculation be determined by using no greater than the 50 th Page 4 of 10
percentile of a minimum of eight comparator organizations for each class of executives. All colleges in Ontario share the same core strategic mandate and purpose, and as such, Mohawk College s Executive Compensation Program has been developed based on analysis of comparators that are applicable to the entire college sector as all colleges compete for executive staff with these organizations. A further review is then undertaken using the Complexity and Accountability Matrix, which assesses the relative complexity and accountability of Mohawk College based on measurable data. The comparative analysis for level 4 identifies the 50 th percentile of the values from the comparators and further discounts this value by 10%. The comparator positions and organizations are set out below, along with a description of how they are comparable to Mohawk College: President The position of College President was compared to the position of President/Chief Executive Officer in the comparable organizations identified below. Colleges As outlined in the Ontario Colleges of Applied Arts and Technology Act, all colleges in Ontario share the same core strategic mandate and operations in delivering postsecondary education. The position of president reports to a board of governors in each of the 24 colleges across Ontario and is responsible for managing the complex and diverse affairs of the college and providing the leadership required to achieve the college s strategic objectives. There is demonstrated mobility of individuals who fill the role of college president from colleges of different size and geographic location within the province. Presidents move from one college to another. Specific comparator colleges used are: Conestoga Humber Seneca Sheridan Page 5 of 10
Universities Like colleges, universities in Ontario share the same function in delivering postsecondary education, including the provision of degrees, diplomas and other credentials. The president fulfills a similar role to that performed by College presidents. The president is responsible for managing the complex and diverse affairs of the university and providing the leadership required to achieve the universities strategic objectives. There is a high level of interaction between the activities of colleges and universities in Ontario, including partnership and pathways agreements. There is demonstrated mobility of presidents and executives between colleges and universities in Ontario. Specific comparator universities used are: University of Guelph University of Ottawa University of Waterloo York University Hospitals Like colleges, hospitals in Ontario are complex organizations delivering public services in Ontario communities. The position of hospital president is accountable to a board of governors and is responsible for managing the complex affairs of the hospital and providing leadership to achieve the hospital s strategic plan. In addition to clinical services, hospitals perform functions in education. There is demonstrated mobility of presidents and executives between colleges and hospitals in Ontario. Specific comparator hospitals used are: Hamilton Health Sciences Corporation London Health Sciences Corporation Trillium Health Partners University Health Network The maximum amount of annual base salary and performance-related pay available to comparable executives from the twelve comparator organizations was determined, and the 50 th percentile value of the maximum salary and performance-related pay established. For the position of President, the maximum value was determined to be $445,000. Given the relative size and assessment of the measurable data on complexity and accountability factors for Mohawk College, the comparative analysis Page 6 of 10
further discounted the 50 th percentile value by 10%, which results in a value of $401,000. Other Designated Executives The class of positions within the Designated Executive Level (excluding the President) were compared to 70 executive class positions in functions of academic, administration, advancement/development, external/community affairs, finance, human resources, individual site, information technology, legal, operations, records/registration, school/programs, supply chain/procurement in the comparable organizations identified below. Colleges As outlined in the Ontario Colleges of Applied Arts and Technology Act, all colleges in Ontario share the same core strategic mandate and operations in delivering postsecondary education. Designated Executives report to the position of president or vice president in each of the 24 colleges across Ontario and are responsible for leading complex departments in order to achieve the college s strategic objectives. There is demonstrated mobility of individuals who fill the executive roles in colleges from colleges of different size and geographic location within the province. Executives move from one college to another. Specific comparator colleges are: Conestoga Humber Seneca Sheridan Universities Like colleges, universities in Ontario share the same function in delivering postsecondary education, including the provision of degrees, diplomas and other credentials. Designated Executives in a university report to the position of President/CEO and are responsible for leading complex departments in order to achieve the university s strategic objectives. There is a high level of interaction between the activities of colleges and universities in Ontario, including partnership and pathways agreements. There is demonstrated mobility of executives between colleges and universities in Ontario. Page 7 of 10
Specific comparator universities are: University of Guelph University of Ottawa University of Waterloo York University Hospitals Like colleges, hospitals in Ontario are complex organizations delivering public services in Ontario communities. Designated Executives in a hospital report to the position of President/CEO and are responsible for leading complex departments in order to achieve the hospital s strategic objectives. In addition to clinical services, hospitals perform functions in education. There is demonstrated mobility of executives between colleges and hospitals in Ontario. Specific comparator hospitals are: Hamilton Health Sciences Corporation London Health Sciences Corporation Trillium Health Partners University Health Network The maximum amount of annual base salary and performance-related pay available to comparable executives from the twelve comparator organizations was determined, and the 50 th percentile value of the maximum salary and performance-related pay established. For the Other Designated Executive positions below President, the maximum value was determined to be $303,000. Given the relative size and assessment of the measurable data on complexity and accountability factors for Mohawk College, the comparative analysis further discounted the 50 th percentile value by 10%, which results in a value of $273,000. Salary Range and Performance Pay-at-Risk Mohawk College s Executive Compensation Program establishes the maximum salary and percent of performance pay-at-risk on the above noted comparator analysis. The Board determined these levels for the President and Other Designated Executives. Given the relative size and assessment of the measurable data on complexity and accountability factors for Mohawk College, the comparative analysis calculates the 50 th percentile of the values from the comparators and further discounted this value by Page 8 of 10
10% in order to establish the maximum combined salary and performance related performance pay-at-risk. Position Salary Range and Performance Pay-at-Risk President $267,000 - $401,000 20% is at risk based on annual performance Other Designated Executives $182,000 - $273,000 15% is at risk based on annual performance The above noted values represent the maximum total potential salary and performance pay-at-risk that may be provided to a Designated Executive. The actual salary and pay-at-risk levels for Designated Executives must be approved by the Board. This decision is guided by consideration of: The scope of executive work, including the accountabilities and complexities of the role External public sector comparators and internal comparators specific to the college (including compensation compression and compensation levels at other colleges with similar complexity and accountability outcomes) The tenure, experience, specialized capabilities or performance of the incumbent Performance in meeting college objectives It is important to note that figures released through the Ministry of Finance s annual salary disclosure may differ from the values identified in this Executive Compensation Program for a number of reasons, including that the Ministry of Finance reporting period is based on a January 1 -- December 31 calendar year whereas Mohawk College s compensation program is based on an April 1 -- March 31 fiscal year and the amount of at risk compensation is based on performance and may not be consistent from year to year. Page 9 of 10
Elements of Executive Compensation That are not Provided to Non- Executives With respect to non-salary compensation, Designated Executives receive the same compensation in the same manner and relative amount that is generally provided to non-executive managers unless it is required for the performance of the executive s job or to satisfy a critical business need. The following compensation element is provided to the position of President because it is required for the performance of their job or to satisfy a critical business need: The President of Mohawk College has the use of an existing College owned vehicle with all operating costs, including insurance, paid by the College. This is a taxable benefit. President s Severance Arrangements The employment of the President is on a fixed term contract for a specified number of years. The role does not have security of tenure. In order to meet normal executive compensation expectations on termination, termination payments are identified. In the event that the President s contract is terminated or not renewed for any reason other than for cause, the Broader Public Sector Executive Compensation Act and Regulations identify that the President is entitled to receive a payment that equates to no more than 24 times the average monthly salary of the President at that time. Page 10 of 10