BOARD MANUAL

Approved By: Number: 7-10

Date Issued: May 25, 2010 Page: 1 of 3
Last Review Date: Last Revision Date:
SUBJECT: Chief Executive Officer (CEO) and Executive Compensation Policy

Purpose
CEO and Executive compensation are important matters for board oversight. To fulfill its
responsibilities in this area, the Board must ensure effective processes are implemented,
monitored and regularly evaluated.

Principles
The Board has the responsibility to:

1. Ensure CEO and Executive compensation is based on best practices, strategic priorities,
and the mission, vision and values of the hospital
2. Use financial resources with care while establishing adequate and appropriate
compensation for the hospital CEO and Executives and enabling the hospital to recruit
and retain experienced, capable and qualified leaders
3. Establish a transparent and defensible basis for CEO and Executive compensation
comparable to other peer organizations
4. Recognize the performance based culture of Grand River Hospital in making decisions
with respect to CEO and Executive compensation
5. Estimate the desire position of GRH within the market place for healthcare executives

The Role of the Compensation Committee of the Board

The role of the Compensation Committee is described in the Compensation Committee Terms of
Reference 3-C-18.

Role of the Vice President of Human Resources

The Vice-President of Human Resources is responsible for maintaining the CEO employee file
and providing insight, feedback and assistance regarding any policy or procedural updates
relating to CEO compensation.

Framework for CEO Compensation

 The Board has direct responsibility to oversee the CEO compensation policy.
 The terms for CEO compensation including any goal based bonus will be established
through an employment contract between the Board and the CEO.
 CEO compensation will include a competitive base salary, goal based compensation,
benefits and perquisites.
  CEO Base Salary compensation will be established in a range which is comparable to
salaries for CEOs in other peer organizations as established by the annual OHA CEO
salary survey
 Any changes to base salary, benefits and perquisites will be made effective to the
beginning of the fiscal year.
 Goal based compensation will be established with reference to expected performance
goals and high achievement goals developed in consultation with the Compensation
Committee.
 Goal based compensation will be assessed as per the compensation plan represented by
the Compensation Committee. The Compensation Committee will present an annual
compensation plan to the board

Framework for Executive Compensation

The term “Executive” refers to hospital Vice-Presidents. Executive compensation for all hospital
Vice-Presidents will be administered by the CEO. The CEO will be responsible for evaluating
the performance of each Executive and for setting his or her compensation, taking into account
the following guidelines:

 Executive Compensation will be in the form of a total compensation package including a

competitive base salary, goal based compensation, benefits and perquisites.
 The CEO will annually conduct a market review in order to establish the compensation
levels for members of the Executive team. This review will include consideration of the
14 peer hospitals which are reviewed as part of the Hospital’s financial planning, and
may include other such comparators as are determined by the Compensation Committee.
The CEO will annually report to the Compensation Committee the outcomes of such
reviews and any salary range adjustments made as a result of such reviews.
 In the annual report to the Compensation Committee the CEO will be accountable for
demonstrating that salary ranges for executive positions collectively reflects the market
position chosen by the board.
 The CEO must have prior approval from the Compensation Committee in order to
establish any Executive base salary that is outside the salary range which has been
established for the Executive position in question.
 An Executive will be eligible for annual goal based compensation to a maximum of 10%
of the upper limit of the salary range for that position.
 The annual effective date for salary adjustments will be aligned to fiscal and performance
management guidelines and timeframes.
 It is recognized Executive Compensation may vary depending upon performance.
Therefore, Executive Compensation will be determined through an annual performance
appraisal process.
 The CEO will be responsible for conducting annual performance appraisals for each
member of the Executive team, taking into account the following principles:
o Executive performance will be reviewed in light of the performance goals (i.e.
what was to be achieved) and the competencies demonstrated in achieving the
goals (i.e. how the goals were achieved) and will include mechanisms for regular
feedback, as well as formal reviews.
 o Performance goals will be established annually based on a combination of
individual, team and hospital goals. These measures will be used to evaluate
Executive performance.
o The goals established may be periodically revisited throughout the year if
unforeseen circumstances arise and take precedence over goals that were
determined at the beginning of the year.
o A self appraisal and multi-rate feedback process will be utilized during the annual
appraisal process.

Other Related Policies

3-B-10 Roles and Responsibilities of the Board

3-C-18 Compensation Committee Terms of Reference
5-6 Chief Executive Officer (CEO) Appraisal Process
6-2 Performance Measurement and Monitoring Policy