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Compensation Framework

Approach

Tarion’s compensation philosophy incorporates both competitive benchmarking and performance-based incentives linked to financial, process, customer satisfaction and employee engagement factors. We engage highly respected independent industry professionals to assess our compensation philosophy and practice on an annual basis.

As a Designated Administrative Authority and as a non-profit organization we are committed to transparency and working with the government and our stakeholders to ensure that our compensation programs are appropriate for our mandate and role.

Board Compensation

Tarion’s board is skills-based and composed of professionals who have extensive experience and expertise appropriate to Tarion’s mandate and who understand and convey the interests of key stakeholders including new home buyers, builders, consumer advocates, the financial community, and the provincial and various municipal governments of Ontario. 

The Board is responsible for the oversight of the organization, including promoting sound governance practices, conducting regulatory oversight and taking a leading role in setting the strategic direction of the organization in areas ranging from consumer protection and licensing to warranty administration and financial stewardship.

The Tarion board is compensated for their contributions of time and expertise as part of a full schedule of board and committee meetings and other supplementary meetings.  The compensation for Tarion’s board is reviewed every two years by independent external experts and is benchmarked against other Designated Administrative Authorities as well as other comparable private and public sector organizations. 

With the exception of an increase to the retainer for the Board Chair and the Audit and Investment Committee Chairs made in 2015, board remuneration has remained constant and unchanged since 2005.

Each board member receives an annual retainer and a per diem fee for each meeting attended. 

Retainer - $11,250 per annum for directors. The Board Chair receives $35,000 per annum. Committee Chairs receive an additional $2,000 with the exception of the Chair of the Audit and Investment Committee who receives $5,000.  

Meeting Fee - $800 per board meeting, $550 per committee meeting. Directors receive 75% of meeting fee if participating by teleconference.

Board members are also reimbursed for travel and other reasonable out-of-pocket expenses associated with attendance at meetings or special functions.

Executive Compensation

Tarion’s mandate requires management expertise in corporate leadership, finance, insurance and underwriting, licencing, warranty administration, human resources, information and technology, law and stakeholder relations.  

Tarion offers its executives a competitive compensation program that includes a base salary and an annual incentive. The executives also participate in the same retirement and benefits plan available to non-executive-management employees. Our performance-based program is intended to allow Tarion to attract and retain highly experienced and strategic leaders in a competitive marketplace.

Tarion’s compensation program is periodically reviewed by independent external experts and is benchmarked against other Designated Administrative Authorities as well as other comparable private and public sector organizations. The Tarion Board approves executive compensation and has its own external consultant that provides advice on market-based compensation trends. 

The annual incentive is earned based on a balanced scorecard of pre-established performance targets at corporate and department levels. These targets are designed to challenge the organization to continuously improve in key areas including financial, process, customer satisfaction and employee engagement. 

A balanced scorecard approach is a well recognized strategy for developing performance targets that do not favour only a single objective (for example profit making in a for-profit company). The balanced scorecard approach involves identifying a range of performance indicators and giving them specific weightings to ensure they work together to incentivize the correct overall outcomes.  It is recognised by CPA Canada as a useful tool for ensuring initiatives of non-profit organizations fit with current strategy and for allocating resources to those initiatives. 1

2018 performance indicators for Tarion are set out in the table below, including how they are weighted:

A FINANCIAL 20%
1 Bottom Line 5%
2 Bottom Line excl Investment & Claims 15%
B WARRANTY 5%
3 Net claims incurred loss ratio 5%
C COST EFFECTIVENESS & IMPROVEMENT 35%
4a Core operating expenses ratio - annual 3%
4b Core operating expenses ratio - 3-year average 7%
5a Combined ratio - annual 1.5%
5b Combined ratio - 3-year average 3.5%
6 Projects - Transformation Readiness 20%
D STAKEHOLDER 40%
7 Homeowner Service Orientation Index 10%
8 Builder Service Orientation Index 10%
9 Reputation Index 5%
10 Employee Engagement 10%
11 Employee Enablement 10%

Statement of Past Compensation

As a Designated Administrative Authority, Tarion discloses aggregate salary and benefit costs in our annual financial statements.  

On October 2, 2019, the Minister of Government and Consumer Services issued a Minister’s Order directing Tarion to disclose board and executive compensation effective October 15. Tarion fully supports the government’s mandate to enhance transparency and has posted a statement of past compensation below and will provide this information on an annual basis at the end of the first quarter (March 31) each year. 

Click here to download the Statement of Past Compensation (PDF)

Click here to download the Minister’s Order for Disclosure of Compensation and Other Payments under the Ontario New Home Warranties Plan Act – September 30, 2019 (PDF)


Performance measurement for Non Profit Organisations – The Balanced Scorecard as An Approach , Chartered Professional Accountants of Canada, 2016.

    

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