Alberta slashes pay, perks and bonuses for CEOs at agencies, boards and commissions, The changes affect CEOs at 23 agencies, boards and commissions by Michelle Bellefontaine, Feb 24, 2017, CBC News
Chief executive officers at 23 of Alberta’s agencies, boards and commissions are getting pay cuts, in some cases losing hundreds of thousands of dollars, as the government moves to eliminate bonuses and bring salaries in line with the public service.
The new pay levels will take effect in two years for people currently in those positions, or upon renewal for nine CEOs whose contracts are set to expire before March 2019.
Perks such as golf course memberships and housing allowances are being eliminated. Severance pay will be capped at a maximum of 12 months.
- Alberta agency, board and commission exec salaries to be reined in
- Alberta Workers’ Compensation Board president took home nearly $900K last year
Bonuses will also be eliminated for executives and staff below the CEO level. The Alberta public service stopped paying bonuses in 2009.
The measures, announced Friday by Finance Minister Joe Ceci, will affect about 270 people and are expected to save the government nearly $16 million a year.
At a news conference, Ceci blamed the previous Progressive Conservative government for not taking action.
“Things got out of whack as a result of the previous government not taking time and attention to follow up the auditor general’s recommendations that were made twice, starting as long ago as 2008,” he said.
Under the new framework, Guy Kerr, CEO of the Workers’ Compensation Board, will earn $396,720 instead of $896,206.
Jim Ellis, CEO of the Alberta Energy Regulator, will see his salary drop from $721,680 to $396,720.
Other high earners facing significant pay cuts include the CEOs of the Alberta Petroleum Marketing Commission, the Alberta Utilities Commission and the Balancing Pool.
Ceci said he held a conference call with the affected boards Friday morning.
“The reaction, I would characterize, was respectful, understanding and appreciative,” he said.
Seven pay bands
Five organizations will not be subject to the pay bands but will be required to send the finance minister details of their executive compensation plans each year.
Alberta Health Services is unique in Canada, and the government could not find a similar organization to use as a benchmark.
The Alberta Management Investment Corporation (AIMCo), Alberta Treasury Branch, and the Alberta Teachers’ Retirement Fund compete with the private sector for executives so the government decided their CEO salaries should meet industry standards.
The Alberta Electric System Operator is overseeing the province’s switch to a capacity electricity market. The CEO salary will be frozen but not changed during the transition period to maintain the current leadership.
The government looked at salaries in the Alberta public service and from similar agencies across the country to come up with seven pay bands.
Future contracts will be reviewed by the new Public Agency Secretariat to ensure they are in line with the new rules.
The combined total cost of perks for the CEOs was about $30,000.
The new regulation comes into effect on March 16. The two-year transition period for incumbents is a legal requirement.
The government is reviewing all agencies, boards and commissions. The first phase of the review resulted in 26 agencies, boards and commissions being amalgamated or dissolved last year.
Work on the second phase of the three-part review is underway. [Emphasis added]
Alberta slashing pay of highest-earning board, agency executives by The Canadian Press, Feb. 24, 2017, The Globe and Mail
The Alberta government is cutting the pay of the highest-earning executives at 23 agencies, boards and commissions.
Finance Minister Joe Ceci says the province is also eliminating bonus payments and market modifiers as well as capping severance pay to one year, for an estimated savings of $16 million a year.
Perks such as signing bonuses, golf club memberships and housing allowances are also being dropped.
A new salary band will be in place to keep pay in line in years to come.
Ceci said the government is acting in an area where the previous Progressive Conservative government failed.
“They failed to act when bonuses, perks and benefits got way out of line,” Ceci said Friday. “Those days of standing by are over.
“Our government is committed to ensuring that the compensation of public servants working in agencies are held to the same standard as the civil service.”
Ceci said he is not focused on whether the reduced salaries will affect Alberta’s ability to draw top talent to the executive suite.
“The benchmarks show that they’re being fairly compensated,” he said.
Ceci promised to rein in salaries after public disclosures last year revealed high payouts, including almost $900,000 a year to Guy Kerr, the head of the Workers’ Compensation Board.
The new base salaries range from $154,000 to just under $397,000 and will be phased in over the next two years.
The new rules affect 270 executives and management employees in the 23 agencies and begin on March 16. About half will see their pay reduced.
The changes will apply to new hires and when current contracts come up for renewal.
For those with contracts not coming up for renewal within two years, such as Kerr, it will automatically kick in on March 16, 2019.
Kerr will then make $396,720.
Kerr could not be immediately reached for comment, but Ben Dille, a spokesman for the WCB said, “I know he (Kerr) is incredibly committed to the organization, and that’s the most important thing for him, and that won’t change as a result of this.”
Friday’s announcement is part of a broader three-part review and restructuring of 301 agencies boards and commissions that began in 2015.
The first phase examined more than 130 agencies directly reporting to the province. As a result of that review, 26 agencies were consolidated or dissolved last year, saving an estimated $33 million over three years.
The second phase is now looking at boards that have representation from the government
Salaries in post-secondary institutions are expected to start in the fall, and those also have big numbers.
Financial statements from last year indicated that University of Calgary president Elizabeth Cannon received $895,000 in the fiscal year ending March 2015, while former University of Alberta president Indira Samarasekera received $980,000.
Ceci wouldn’t say if he expects significant savings from the upcoming reviews.
“I don’t want to presuppose what we’re going to see in the future,” he said.
A salary freeze has been in place for almost a year for all management and non-union employees on agencies, boards and commissions. [Emphasis added]
Government cuts CEO pay and bonuses at agencies, boards and commissions by Stuart Thomson, February 24, 2017, Edmonton Journal
Chief executives at Alberta’s agencies, boards and commissions will soon have to start paying for their own golf club memberships.
The government hopes to save $16 million by cutting salaries, abolishing bonuses and removing perks for top executives at 23 agencies, including the Workers’ Compensation Board, the Alberta Utilities Commission and the gaming and liquor commission.
Severance pay will be capped at 12 months and other benefits, such as pension plans and health benefits, will be brought in line with the existing model in the Alberta government.
“What we found is that, up until now, determining compensation has been a bit of a free-for-all,” Finance Minister Joe Ceci told a news conference Friday at the Alberta legislature.
The bloated salaries were flagged twice by the auditor general since 2008 and Ceci pilloried the previous government for not addressing the issue.
“We’re changing things. We’re making it so you have to have competencies to get into (these) positions. It’s not who you know anymore, it’s what you know,” said Ceci.
The government used a third-party company to review a database of more than 200 public sector salaries across Canada and create a framework for the province. The base salaries of 10 CEOs will see a reduction due to the new pay structure.
For example, Guy Kerr, CEO of the Workers’ Compensation Board, took home a base salary of $475,000 in 2015, but disclosed $896,206 in total compensation thanks to bonus pay and benefits. The new base salary for the WCB boss will be $396,720.
The perks, which included health and golf club memberships, amounted to about $30,000 for all the CEOs and will be completely banned.
The regulation banning bonus pay — which affects all forms of bonuses, such as variable pay, pay-at-risk and market modifiers — extends to 270 executives and management employees at the agencies.
A two-year notice period is required for CEOs under contract so, although the changes take effect March 16, many won’t take a hit to their bank account until much later. Nine CEOs have contracts expiring before the two-year period ends and will be subject to the new salary rules during a renegotiation.
Five agencies won’t fall under the new framework and will be required to provide compensation plans instead:
• AIMCo, ATB Financial and the Teachers’ Pension Trust — the three financial organizations — have to compete with private sector counterparts.
• Alberta Health Services doesn’t have an equivalent agency anywhere in Canada, so no compensation comparison could be made.
• The Alberta Electric System Operator will have total compensation frozen and will be required to submit a pay plan because it will be a major part of the province’s switch to a capacity energy market. The government is trying to maintain “executive continuity” during the transition.
Ceci said after the switch to a capacity market is completed, “we’ll consider bringing AESO under this regulation.”
Similar regulations have been adopted in British Columbia, Ontario, Quebec, Nova Scotia and by the federal government. [Emphasis added]
Alberta expects to save $35M by streamlining boards and commissions by The Canadian Press, March 17, 2016, Calgary Herald
Alberta’s finance minister says the government will axe or amalgamate at least 25 of its agencies, boards, and commissions, saving $35 million over the next three years.
“It’ll make us more nimble as a government, it will obviously save us money, and it won’t affect our long-term governance for the important things moving forward,” Joe Ceci said Thursday.
Ceci declined to say which boards face the axe or will be reconstituted. He said details will be released in or around the 2016-17 budget on April 14.
The decision comes after a review of 136 boards, comprising many of the heavy hitters like Alberta Health Services, which has a $14-billion a year budget.
The government also reviewed the Alberta Energy Regulator, the Alberta Gaming and Liquor Commission, the Alberta Securities Commission, Alberta Treasury Branches, Alberta Transportation Safety Board, the Health Quality Council of Alberta, the Labour Relations Board, Municipal Government Board, Occupational Health and Safety Council and the Public Service Pension Board and the Workers’ Compensation Board.
It is the first of a three-stage review of all 301 agencies, boards, and commission across government.
Ceci said it’s critical to find savings wherever possible given that low oil prices are blowing large holes in revenues.
“There’s still more work to do, but I’m pleased with the results so far,” he said.
“Albertans expect us to be prudent and be balanced in our approach because of this significant deficit.”
Alberta Party Leader Greg Clark said he supports the move to reduce the boards, but urged the government to not pursue false economies by curtailing the work of boards fostering research and innovation.
“If they’re going to collapse that and jeopardize long-term research that is underway, that is a concern,” said Clark.
Along with the review, Premier Rachel Notley’s government will be introducing legislation in the current sitting to update and streamline how the boards operate.
“It’s going to look at improving public oversight and stewardship of the agencies boards and commissions … in part to bring compensation and accountability and transparency back into line with the public service,” said Ceci.
Late last year, the Notley government passed legislation that will soon make public the names of members of some agencies, boards, and commissions who receive more than $125,000 a year in total compensation.
The first such report is scheduled to be online on June 30. [Emphasis added]
NDP putting forward bill this spring to ‘streamline’ ABCs: Mason by Darcy Henton, March 7, 2016, Calgary Herald
Albertans will finally begin to see some action on the revamping of government agencies, boards and commissions initially promised by former premier Jim Prentice and later by Premier Rachel Notley last May.
Government House leader Brian Mason said the NDP government will pass legislation this spring to modernize governance of the organizations, a move first proposed to former premier Ed Stelmach by a government task force in 2007.
“We’ll introduce legislation that will support our goal of modernizing and streamlining the vast number of agencies, boards and commissions to ensure their role and composition are reflective of the needs of Albertans today,” Mason told reporters at the legislature Monday.
He said some of the 300 organizations, also called ABCs, will be shut down.
“Those that we consider no longer necessary will be eliminated altogether,” he said as he set out the government’s agenda for the spring sitting. “Others will be consolidated and a number will be retained.”
The move was applauded by the official Opposition on Monday.
Wildrose House leader Nathan Cooper said the government must also ensure that future appointments to the agencies are based on merit.
“If the Alberta government comes forward with a piece of legislation that provides that on an ongoing basis and does consolidate some ABCs that perhaps aren’t as effective as they once were, I would imagine our caucus would be supportive of such an endeavour,” he said.
The Canadian Taxpayers Federation called the government action “positive.”
“ABCs do absorb a large chunk of the Alberta budget, as was noted by the previous Progressive Conservative premier,” said Alberta director Paige MacPherson. “There’s a lot of streamlining that could be done.”
She said there’s been a lot of talk and little action on addressing the issue and it’s disappointing the review didn’t get off the ground more quickly.
Prentice initially announced a review of nearly 200 organizations in September 2014, starting with four financial agencies that have assets of $143 billion, and moving on to 52 agencies that report directly to government.
The first round of that review, conducted by a panel of the Alberta business executives, was supposed to have been completed in December 2014, but no report of its findings was ever released.
Then last April, just before the provincial election, Prentice promised to eliminate 80 of Alberta’s organizations by the end of the 2015-16 fiscal year.
He said some would be combined and others that “have out-lived their usefulness” would be eliminated.
When Prentice’s term was brought to an end by the New Democrats in May, Notley vowed to continue the review, saying she wanted to assess the content and quantity of the organizations.
But the review never actually started until last November.
Finance Minister Joe Ceci told reporters at the time the review would have three phases, with the first phase involving 136 public agencies under the Alberta Public Agencies Governance Act to be completed by March.
The second phase, involving 141 agencies not covered by the act, is scheduled for completion this summer, while the third phase focusing on boards of governors at post-secondary institutions is slated for completion this fall.
Ministers examined the mandate, membership and governance of organizations that fall under their ministries and looked for duplication and cost savings.
An independent consultant advised the government on rationalizing and standardizing compensation levels of agency appointees and staff.
The organizations have been steeped in controversy as a result of a history of blatant patronage appointments of party executives, candidates and MLAs.
A Postmedia investigation in 2007 found the province’s top 100 organizations were stacked with card-carrying members of the PC party. It discovered overall that PC party members, who made up three per cent of the Alberta electorate, made up 46 per cent of the constituted boards.
A task force report to Stelmach in 2007 said the province was “at a crossroads” over its organizations, which had grown without corresponding accountability.
“Board members must be selected according to competence,” the panel advised. “They must also be subject to evaluation, and operate with defined terms of office.”
Alberta Party Leader Greg Clark said the NDP has a great opportunity to overhaul and consolidate agencies boards and commissions, so long as they don’t replace partisan PC appointments with partisan NDP appointments.
“I worry that perhaps that will happen,” he said. “That would not be good for Alberta.” [Emphasis added]