Salaries at Provincial Agencies

Originally published 11 October 2016

Background

Controversy continues to swirl around salary levels at Alberta’s agencies, boards, and commissions (ABCs).  An article in The Globe and Mail by Justin Giovannetti  two weeks ago incorrectly identified the salary of the President and Chief Executive Officer of the Workers’ Compensation Board as the highest of provincial ABC executives.  A tabulation by Albertarecessionwatch.com of the largest and most critical ABCs in the financial, health, energy, and post-secondary sectors shows that WCB CEO Guy Kerr ranks 20th among his ABC colleagues.
The misunderstanding is based on confusion about the implementation of the Public Sector Compensation Transparency Act and Public Sector Compensation Transparency General Regulation (General Regulation).  This new legislation is similar to that found in other provinces such as Ontario and British Columbia known as “sunshine legislation” or the “sunshine list.” The Alberta legislation builds on measures taken by the Stelmach and Redford governments to release expense claims of government ministers and senior officials.  Online salary disclosure for 2015 starts at $104,751 for Government of Alberta employees and $125,000 for ABCs and includes both base salary and severance.  The reporting consists of all compensation and severance and non-monetary benefits which include employers’ pension, EI and CPP contributions.  All members of the boards of ABCs are also covered with no compensation thresholds.

However, these measures supplement existing requirements under a 1994 Treasury Board directive (now the Fiscal Management Act) which directed departments and provincial agencies to disclose the compensation of their most senior executives.  Thus we have a track record of executive compensation of top executives- normally the most highly remunerated- for two decades.

Under the relatively new General Regulation, compensation levels of employees of certain agencies- the Alberta Investment Management Corporation (AIMCo); Alberta Treasury Branches (ATB Financial) and its subsidiaries; and the Alberta Teachers’ Retirement Fund Board (ATRF) are exempt from salary disclosure. But, as noted, the compensation of top executives at these agencies has been, and continues to be, available going back two decades. According to a 27 April 2016 news release, Justice Minister Ganley justified the exemption as “consistent with the best practices in other public sector financial agencies…. and provide a level playing field between agencies and their private sector counterparts, while ensuring Albertans continue to be served by the top talent in the highly competitive financial industry.”
The complexity of executive compensation depends on the nature of the organization and peer groups in the industry selected by those who recommend and decide executive compensation levels. This is particularly true for the exempted agencies. As the summary table below shows, AIMCo has the most executives in the highest paid category. AIMCo also has the best disclosure on executive compensation by far of any of the agencies (18 pages). (The Alberta Teachers Retirement Fund also has fairly good disclosure of its compensation philosophy and mechanics.)
For ATB Financial, ATRF, and AIMCo, executives are compensated in four basic ways: 1) base salary; 2) annual compensation bonuses or variable pay; 3) long-term incentive plans; and 4) pensions and other post-employment benefits. At AIMCo, executives may also receive a grant for a special long-term incentive plan triggered when a “stretch goal” for the 4-year Long-term Incentive Plan has been exceeded.
Most employers also make contributions for Employment Insurance, Canada Pension Plan as well as pension and supplemental registered pension plans.  Other benefits may include dental coverage, vision care, disability insurance, and group insurance. Often the CEO is provided with a car which may, or may not, depending on the agency, be included in total compensation. Some ABCs provide perquisite allowances, club memberships, and professional fees. The devil is in the details.

The summary table below covers total compensation over $500,000 in 2016 and total compensation in 2015. For certain executives, there is no comparable 2015 data since they were not employed in the previous fiscal year. For NAIT, SAIT and MacEwan University the financial statements are for the year ending 30 June 2015, the most recent numbers available. Workers’ Compensation Board and ATRF statements are for the fiscal year ending 31 December  2015.
Since executive compensation has become a highly specialized area, the numbers from the tables are taken from the audited financial statements of the organization concerned. There are many footnotes explaining the cash payments, cash benefits and non-cash benefits. The presentation format varies considerably between institutions especially as to detail. The following PDF documents are extracts from the 2015 or 2016 notes to financial statements and annual reports for the 16 agencies reviewed.

In addition to the financial statements and annual reports, the online compensation disclosure for these agencies was reviewed and an additional ten individuals were identified with compensation and benefits as reported totaling more than $500,000.  These individuals were from universities or Alberta Health Services.  Numbers reported are for the 2015 calendar year.
Albertarecessionwatch.com contacted either the Chief Financial Officer or Chief Human Resources Officer of the 16 agencies with executives on the list on 2 and 3 October requesting a review of the table. At the time of posting only ten agencies (Workers’ Compensation Board (WCB), the Alberta Securities Commission, NAIT, Grant MacEwan University, Alberta Health Services, Agriculture Financial Services Corporation (AFSC), ATRF, AIMCo, ATB Financial, and the Alberta Petroleum Marketing Commission) had responded. Responses varied from helpful corrections (and there were several) from three agencies, two conversations with CEOs, to unhelpful referrals to the financial statements without comment on the numbers and classification presented in the table.

The ranking below reveals that while base salaries in the executive ranks of Alberta’s ABCs range roughly between $250,000 to $600,000, total compensation at the financial corporations is often multiples of the base salary through annual bonuses and long-term incentive plans. In the energy-related commissions, base salaries are high but bonuses rare or non-existent. In the post-secondary sector, the most senior administrators receive base pay of upwards of $500,000 while pension and special leave entitlements may produce compensation approaching the $900,000  range.
A key policy issue for the government in determining how to shave executive salaries provided for in Bill 19 is to ensure adequate disclosure across all agencies.  For post-secondary institutions and the Alberta Securities Commission (ASC), no compensation discussion and analysis (CDA) is provided. This is true for the energy ABCs and at the WCB. At ATB Financial, the CDA is three pages which compare unfavourably with AIMCo, ATRF, and chartered bank disclosures that typically run over 40 pages. In the case of ATB, key metrics are not provided on the long-term incentive plan. For example, AIMCo spells out corporate objective performance and asset class performance over a four-year period. For ATB, short term incentive payments on based on “revenue generation and operational effectiveness, customer measures, and employee engagement scores,” but does not indicate specifically the percentage of each factor.

For all agencies there is no disclosure on what peer groups the board has used to determine salaries.  These deficiencies remain despite recommendations from the Auditor General going back to 2008.
Severance or payments derived from a termination clause were observed in a three cases.

	Total Compensation of Executives of  Alberta Agencies, Boards and Commissions  ($000s)
Rank	Position title	Organization	Name	Base Pay	Grand Total- 2016	2015	Difference 2016/2015
1	President and chief executive officer	ATB Financial	Dave Mowat	504	2724	3138	-15%
2	Chief Investment Officer	AIMCo	Dale McMaster	387.5	2197.3	2050	7%
3	President and chief executive officer	AIMCo	Kevin  Uebelein	500	1971.3	N/A
4	Executive Vice-President -Private Markets	AIMCo	Robert Mah	333.5	1792.3	1549.5	14%
5	Chief Risk Officer	AIMCo	John Osborne	220.2	1599.8	1129.1	29%
6	Former President and CEO	AIMCo	Leo de Bever		1500	3728.4	-149%
7	Chief Client Relations and Legal Officer	AIMCo	Darren Baccus	259.8	1489.7	1169.3	22%
8	Chief Investment Officer	Alberta Teachers’ Retirement Fund	Derek Brodersen	315	1279.5	1065.8	17%
9	Former Chief Executive Officer	Alberta Teachers’ Retirement Fund	Emilian Groch	291	1181.6	1705.5	-44%
10	Senior Vice-President, Public Markets	AIMCo	Peter Pontikes	260.4	1136.6	985.7	13%
11	Chief Corporate and Human Resources Officer	AIMCo	Angela Fong	285.3	1132.1	799.5	29%
12	Senior Vice-President, Fixed Income	AIMCo	Sandra Lau	260.4	1058.1	966	9%
13	Chief strategy and operations officer	ATB Financial	Curtis Stange	317	1054	1265	-20%
14	Executive Vice-President, Business and Agriculture	ATB Financial	Wellington Holbrook	302	973	1045	-7%
15	President and Vice-Chancellor	University of Calgary	Elizabeth Cannon	480	943	895	5%
16	President  and Vice-Chancellor	University of Alberta	David Turpin/ Indira Samarasekera	547	888	N/A
17	Executive Vice-President, Corporate Financial Services	ATB Financial	Ian Wild	318	877	1099	-25%
18	Chief Financial Officer	AIMCo	Jacqelyn Colville	274.1	873.1	792.8	9%
19	Chief Financial Officer	ATB Financial	Bob McGee	252	866	N/A
20	President and chief executive officer	WCB	Guy Kerr	466	863	865	0%
21	Head, Private Investments	Alberta Teachers’ Retirement Fund	Rakesh Saraf	278.3	851	801.3	6%
22	Chief Risk Officer	ATB Financial	Bob Mann	285	823	1083	-32%
23	Executive Vice-President, Retail Financial Services	ATB Financial	Rob Bennett	267	807	840	-4%
24	Chief People Officer	ATB Financial	Lorne Rubis	287	789	918	-16%
25	Head, Real Estate Investments	Alberta Teachers’ Retirement Fund	Barry Petursson	256.6	786.9	747.8	5%
26	Vice-President Research	University of Alberta	Lorne Babiuk	506	782	768	2%
27	Vice President, Facilities and Operations	University of Alberta	Don Fleming	479	768	706	8%
28	Vice-President, Finance and Admin.	University of Lethbridge	Nancy Walker	332	751	314	58%
29	Professor a)	University of Calgary	Stephen L. Bryant	705.9	737.5	Not available
30	President	ATB Investor Services	Chris Turchansky	252	733	N/A
31	President and chief executive officer	Alberta Energy Regulator	Jim Ellis	529	725	710	2%
32	Vice-President, University Relations	University of Alberta	Debra Pozega Osburn	384	722	511	29%
33	Senior Vice-President, Operations	AIMCo	Michael Baker	242	719	345.9	52%
34	Senior Portfolio Manager, Equities	Alberta Teachers’ Retirement Fund	Charlie Kim	238	714.1	716	0%
35	President and Managing Director	Agriculture Financial Services Corporation	Brad Klak	518	698	632	9%
36	President and Vice-Chancellor	University of  Lethbridge	Mike Mahon	428	687	658	4%
37	Senior Vice-President, Reputation and Brand	ATB Financial	Peggy Garrity	267	676	788	-17%
38	Vice-President, Finance and Admin.	University of Alberta	Phyllis Clark	469	672	696	-4%
39	Executive Director	Alberta Securities Commission	David Linder	379	659	619	6%
40	Vice- Chair	Alberta Securities Commission	Stephen Murcison	375	636	560	12%
41	Chief Executive Officer	Alberta Petroleum Marketing Commission	Richard Masson	630	635	635	0%
42	President and Chief Executive Officer	Southern Alberta Institute of Technology	David Ross	352	631	606	4%
43	Chief Executive Officer	Alberta Teachers Retirement Fund	Rod Matheson	276	623.5	N/A
44	Interim President, and Chief Medical Officer	Alberta Health Services	Verna Yiu	522	614	616	0%
45	Vice-President, Operations and Chief Information Officer	WCB	Wendy King	360	609	621	-2%
46	Professor a)	University of Alberta	Randall Morck	542.7	581	Not available
47	Professor a)	University of Alberta	Carlo Montemagno	538.3	576.1	Not available
48	Provost and Vice-President, Academic	University of Calgary	Dru Marshall	413	571	562	2%
49	President and Chief Executive Officer	Northern Alberta Institute of Technology	Glenn Feltham	309	570	576	-1%
50	Chief Financial Officer	WCB	Ron Helmhold	341	569	569	0%
51	Provost and Vice-President, Academic	University of  Lethbridge	Andrew Hakin	353	569	518	9%
52	Vice-President, Community Engagement and Commun.	Alberta Health Services	Carmel Turpin	237	560	150  (7)
53	Vice-President Academic	Southern Alberta Institute of Technology	Lee Haldeman /Brad Donaldson	186	555	1221	-120%
54	Chief Financial Officer	ATB Financial	Jim McKillop	285	553	1083	-96%
55	Zone Medical Director a)	Alberta Health Services	Kevin Worry	483.5	543.8	Not available
56	Chief Executive (a)	Alberta Utilities Commission	Robert Heggie	464	543.0	Not available
57	Vice-President, Research	University of Calgary	Ed McCauley	391	539	529	2%
58	Professor a)	University of Alberta	Carl Amrhein	498.5	538.1	Not available
59	Vice-President , Student Services	MacEwan University	Cathryn Heslep	193	536	279	48%
60	Vice-President, Human Resources	Alberta Health Services	Todd Gilchrist	406	529	N/A
61	Physician a)	Alberta Health Services	Peter Craighead	457.6	527.9	Not available
62	Vice- Chair	Alberta Securities Commission	Tom Cotter	412	526	469	11%
63	President and CEO	Alberta Health Services	Vicki Kaminski	462	525	547	-4%
64	Executive Vice-President, Operations	Alberta Energy Regulator	Kirk Bailey	317	524	449	14%
65	Vice-President and Medical Director, Northern Alberta	Alberta Health Services	David Mador	452	522	547	-5%
66	Vice President and Medical Directora)	Alberta Health Services	Francois Belanger	448.3	517	Not available
67	Chair  a)	University of Alberta	Xin Min Li	478.1	512.8	Not available
68	Chief Legal Officer	AIMCo	Rod Girard	180.2	511.0	361.4	29%
69	Chair	Alberta Utilities Commission	Willie Grieve	348	509	479	6%
70	Lab Pathologist a)	Alberta Health Services	Mireille Kattar	475.7	507	Not available
			Totals	25863	57763.12	47330
	Notes: All amounts in $000s. N/A not applicable.
	NAIT, Grant MacEwan and SAIT year ends are 30 June 2015.  ATRF and WCB for year ending  31 December 2015.
	a) From Online  Compensation Disclosure for Agencies, Boards and Commissions,  calendar 2015.

Pensions

Another important element of compensation is pension contributions and the annual cost of the pension promise. Many senior executives do not have pension plans per se. Some, like Dave Mowat of ATB enter into “other post-employment benefit plans” (OPEB).   The contributions corporations must make to honour the promise can be very substantial. The analysis includes this information as well as the change in the value of estimated future payouts for AIMCo executives during the fiscal year.
Many executives who do not belong to a defined benefit plan (DB plan) make contributions to defined contribution plans (DC plan) whose sums are typically matched by their employer.  Another common benefit is the supplemental retirement pension plans offered to most management employees and is used to top off DB or DC plans that are capped under the Income Tax Act.  These plans are typically non-contributory and increase post-employment pension entitlement based on the employees base salary.

Gender

Of the 70 individuals identified, 15 are women.  The highest paid woman is Angela Fong, AIMCo’s Chief Corporate and Human Resources Officer at number 11 with total compensation of $1.058 million.  Sandra Lau, the Senior Vice-President of Fixed Income with AIMCo follows at number 12.   University of Calgary President and Vice-Chancellor, Elizabeth Cannon, is next at number 15.

Financial Expertise

The prevalence of financial sector employees in the list is startling. Of the 69 listed, 11 are from AIMCo, ten from ATB Financial, six from the ATRF, three from the ASC, and one from Agriculture Financial Services Corporation. Thus nearly one half of the highest paid executives come from the financial sector.  AIMCo executives make up nine of the top ten earners. Of the top 20 positions, only three were not from the financial sector and arguably the WCB head, given the importance of investment performance and insurance aspects, could be considered financial. And, given the exemptions afforded AIMCo, ATB, and ATRF, is would be highly probable that perhaps a dozen or more senior managers would be included in this league of total compensation over one-half million dollars.

Besides the financial sector, senior administrators and professors from post-secondary institutions accounted for 20 or nearly one-third of the survey. Typically the President, Provost and Vice-President Academic, and the Vice-President, Research made the list. Besides senior administrators, four professors made the list. Alberta Health Services (AHS) where controversy over executive salaries surfaced in the Calgary and Capital (Edmonton) Health Regions in the early 200os, ranked lower in the survey with the top AHS official at number 44. There were nine executives from AHS on the list or about 13 per cent.

Those with the highest base salaries are with agencies of the Ministry of Energy. Base salary for the CEO of the Alberta Petroleum Marketing Commission is $635,000 and $539,000 for the President and CEO of the Alberta Energy Regulator.

The complete chart is available in PDF below. Note that some of the cells contain comments that add explanation to the general headings used in this comparison.

abc-salaries
Watch for more analysis and opinion on this subject in the next several weeks.