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Treasury Board President Stockwell Day arrives on Parliament Hill for the Conservative summer caucus meeting on Aug. 5, 2010. (Sean Kilpatrick/THE CANADIAN PRESS)
Treasury Board President Stockwell Day arrives on Parliament Hill for the Conservative summer caucus meeting on Aug. 5, 2010. (Sean Kilpatrick/THE CANADIAN PRESS)

Performance pay for senior bureaucrats up sharply, even as bonuses are slashed Add to ...

The Conservative government added millions of dollars in performance pay for public service executives during the recession even as it pledged to slash bonuses in the face of hard times.

Briefing notes to Treasury Board President Stockwell Day obtained through Access to Information reveal the minister in charge of finding billions in federal savings is taking a very close look at why Ottawa's management tab keeps going up.

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The government promised in June, 2009 to cut bonuses by 70 per cent - a target it eventually succeeded in meeting when the final numbers came in earlier this year.

However, in the technical jargon of the federal bureaucracy, "bonus" pay is only a small part of what many would consider to be a bonus - namely, an extra lump-sum payment at the end of the year based on performance. In addition to bonus pay, executives in the federal government also qualify for a much larger amount of performance pay over and above their salaries called "at-risk" pay, and those payouts are on the rise.

When the two forms of pay are combined, spending on performance pay for executives was $70.1-million in 2008-2009, a 19-per-cent increase from the year before, according to a February briefing note to Mr. Day from Daphne Meredith, the government's chief human resources officer.



<a title="View The increase in performance pay on Scribd" href="http://www.scribd.com/doc/35836742/The-increase-in-performance-pay" style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block; text-decoration: underline;">The increase in performance pay</a> <object id="doc_8559" name="doc_8559" height="400" width="100%" type="application/x-shockwave-flash" data="http://d1.scribdassets.com/ScribdViewer.swf" style="outline:none;" > <param name="movie" value="http://d1.scribdassets.com/ScribdViewer.swf"> <param name="wmode" value="opaque"> <param name="bgcolor" value="#ffffff"> <param name="allowFullScreen" value="true"> <param name="allowScriptAccess" value="always"> <param name="FlashVars" value="document_id=35836742&access_key=key-2h68aug9z7848emud170&page=1&viewMode=list"> <embed id="doc_8559" name="doc_8559" src="http://d1.scribdassets.com/ScribdViewer.swf?document_id=35836742&access_key=key-2h68aug9z7848emud170&page=1&viewMode=list" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="400" width="100%" wmode="opaque" bgcolor="#ffffff"></embed> </object>


"Clearly the government was very careful in the language they used," said Christopher Chen, a private-sector compensation consultant at Hay Group in Toronto. "And they followed through exactly to the letter of their own definition of bonus."

While most private employers have a similar concept of at-risk pay that is often referred to as incentive pay, he said most workers still call these payouts a bonus.

"When people hear bonus, they will likely think it's going to be anything you get that isn't part of your salary, paid out annually," he said. "That's just how people think. A bonus is a bonus."

The Globe has also learned that Mr. Day's office is sitting on an advisory report that warns him not to scrimp on salaries over the long term for fear of losing top talent to the private sector.

For the past decade, Ottawa has largely set its salary and bonus rates based on the advice of an annual report from the Advisory Committee on Senior Level Retention and Compensation, led by Carol Stephenson, the dean of the Richard Ivey School of Business.

However, this year's report was submitted a month ago and hasn't been posted online.

"We haven't had a response yet," Ms. Stephenson said in an interview. She expressed hope that Ottawa will not bring in a multiyear freeze on executive pay, as was done during cutbacks in the 1990s. "I would hate to see something like that again if that's not what's going on in the market, because it becomes so difficult to catch up."



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The memo on performance pay says the increase is partly due to a rise in the number of executives, but also because the maximum at-risk pay rate was increased last year from 16.4 per cent to 20 per cent over and above the base salary for senior executives. In contrast, the maximum bonus pay remained at 6 per cent.

Melisa Leclerc, a spokesperson for Mr. Day, repeated these reasons and said the Stephenson report will be posted in the coming weeks. She also said the government is in the process of reviewing how bonuses are managed. While she acknowledged she sometimes makes reference to "at-risk bonuses," she said it is not a bonus.

"It is called at-risk as an [executive]is at risk of losing it if he/she does not meet expectations," she wrote in an e-mail. "Bonus pay is awarded to those who surpass expectations."

Government data show that 94 per cent of the 5,765 executives received at least some at-risk pay, while only 14 per cent received a bonus.

A separate six-page memo created at Mr. Day's request shows that while employment in the core public service is up 13 per cent since 2006 and 28 per cent since 2001, the executive ranks are up 21 per cent since 2006 and 56 per cent since 2001.

Ms. Meredith's note to the minister says there are a number of reasons for this, including a shift to more "knowledge-based workers." She also said extra managers were brought in over the years because of Y2K, the 2003 SARS outbreak, the Gomery inquiry, the Federal Accountability Act, climate change, food safety, anti-terrorism programs, the G8 and G20, native health and recession-triggered stimulus programs.

"Each of these new initiatives or expanded mandates has required a new or enhanced management role," it states.



Public service bonuses: what "risk"?

94% Percentage of public service * executives who received "at-risk" pay in 2008-09

$70.1-million Total combined "at risk" and bonus payments to public service executives in 2008-09

$56.7-million Total combined "at risk" and bonus payments to public service executives the year before



A growth industry

Year

Number of executives

Number of non-executives

2001

4,311

212,462

2006

5,577

239,517

2010

6,743

271,169



Top spenders on performance pay

Department Number of executives

Department

Extra pay

Number of executives

Foreign Affairs and International Trade

$7.5-million

563

Human Resources and Social Development

$5.6-million

530

Public Works and Government Services

$3.8-million

375

Indian Affairs and Northern Development

$3.5-million

274



* "Public service" is defined by Treasury Board as "core public administration," not including entities such as Canada Revenue Agency, Canada Food Inspection Agency, House of Commons, etc.

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