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Compensation Framework

Approach

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. In fact, we are the first Designated Administrative Authority in Ontario to publicly disclose compensation information.

Tarion’s compensation philosophy is aimed at ensuring we can attract qualified individuals to fill their roles. By virtue of having its authority to operate founded in a designation from the government under the Ontario New Home Warranties Plan Act, Tarion operates both as a private corporation and as part of the broader public sector.

Tarion engages third party organizations that specialize in compensation to advise the Board regularly with respect to benchmarking and salary ranges.

It’s important to note that our management team has subsequently reviewed the Key Performance Indicators (KPIs) for the incentive plan and made changes to better reflect Tarion’s mandate to regulate builders and assist homeowners with warranty disputes. In response to a recommendation from Ontario’s Auditor General, new metrics with operational performance focusing on consumer service orientation have been chosen. These changes are effective for the 2020 incentive Plan.  

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. 

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.

It’s important to note that while the Board retainer amount and per diem have remained consistent, the downsizing of the Tarion Board from 16 members to 12 will reduce overall compensation in 2020.

Executive Compensation

Tarion offers its executives a 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 experienced and strategic leaders.

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

A balanced scorecard approach is a well recognized strategy for developing performance targets that do not favour only a single objective. 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)

2019 performance indicators for Tarion are set out in the table below, including how they are weighted: 

A FINANCIAL 25%
1 Bottom Line 5%
2 Bottom Line excl Investment & Claims 20%
B WARRANTY 5%
3 Net claims incurred loss ratio 5%
C COST EFFECTIVENESS & IMPROVEMENT 40%
4 Core operating expenses ratio - annual 10%
5 Combined ratio - annual 5%
6 Project - Condo Cancellation Disclosure Initiatives 10%
7 Projects - Initiatives supporting launch of Home Construction Regulatory Authority 15%
D STAKEHOLDER 30%
8 Homeowner Service Orientation Index 10%
9 Builder Service Orientation Index 10%
10 Reputation Index 10%

Statement of Past Compensation

As a Designated Administrative Authority, Tarion discloses aggregate salary and benefit costs in our annual financial statements.  
On September 30, 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 2019 Statement of Past Compensation (PDF)

Click here to download the 2018 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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