News release

July 7, 2003

PSAC says suspend executive performance bonuses  

OTTAWA - No one should be surprised by the recent headlines about rich bonuses for top federal public sector executives, according to the Public Service Alliance of Canada (PSAC).  

“The only surprise is why it continues to happen year after year,” says PSAC National President Nycole Turmel.   “The problems with performance pay are certainly not new.   The original performance pay system which came into existence in 1981 was anything but open and transparent.”    

“In September 1997, CTV broke the story that fully 97% of the executive group had received bonuses for 1996 ranging from $4,300 to more than $12,000.    Now, in spite of the introduction of a supposedly new system in 1998, the latest documents show that virtually the same number - 96% - are receiving bonuses.”  

In 1998, the Advisory Committee on Senior Level Retention and Compensation recommended that the 1981 performance pay system be replaced by an “at risk” system.   One of the reasons the Advisory Committee gave for the recommended change was that ‘…even when performance pay has been implemented, it has been done in a way that is far from ideal.   As a result, the concept of performance pay has been totally discredited, despite its merit in principle.   Performance pay is seen as neither linked to achievement or business plans, nor as transparent and fair.’  

“At the time, in a Statement to the Senate Standing Committee on National Finance, which was examining executive compensation, the PSAC recommended that such a damning indictment should be grounds to eliminate the system,” indicates Turmel.   “Instead, the government proceeded with the more expensive ‘at risk’ system which obviously has done nothing to improve the situation.”  

“Until this year, executive compensation - a combination of economic increases and performance pay - has been far higher than for other federal public sector workers and economic sectors,” says Turmel.   “Given the latest statistics, a strong case can be made to suspend the performance pay system pending a full investigation of what it is intended to achieve, its effectiveness and whether it is in fact a hidden form of regular salaries.”  

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For information: Liz Holden, PSAC Communications, (613) 560-4280