Alberta Health Services paid too much severance: AG

Government agencies and departments need more guidance from the Alberta government on compensation packages for their senior executives, Alberta Auditor General Fred Dunn says in his latest report.

The amount and manner in which severance was paid to senior executives who lost their jobs in the dissolution of nine regional health authorities last year was slammed Friday by Alberta Auditor General Fred Dunn as he released his latest report.

"If you want a quick term, I'll call them gold-plated," Dunn said of the severance payouts at morning news conference.

"There were some payments that were — call them friendly parting gifts."

In 2008, nine former regional health authorities were collapsed into a single board — Alberta Health Services — for the entire province.

Thirty senior executives lost their jobs in the reorganization, which resulted in Alberta Health Services spending $18 million on severance payments.  AHS spent a total of $23 million in severance costs, which included additional payments for some executives of bonuses, vacation payouts, and money for supplementary retirement plans. Some executives continued to get health benefits and pension contributions after they left, Dunn said.

The auditor general's office looked at the severance payments given to eight CEOs who lost their jobs at regional health boards and to 11 other executives.

Each termination package was negotiated using external legal counsel. Alberta Health Services was involved in approving some but not all the severance payments. The auditor general was only able to find documentation showing AHS approved the severance amounts for four of the 19 cases.

A lack of oversight or clear standards led to three terminated executives receiving too much severance pay, costing Alberta Health Services $41,000 more than necessary, the report also said. The new board is trying to recover that money.

Province will accept recommendations: premier

The auditor general found that termination benefits were not consistent and although the Alberta Treasury Board has a directive for the release of deputy ministers and senior officials who work for the government, public agencies developed their own termination policies and practices.

"This typically results in higher termination benefits than would have been paid if the public agencies had followed the Treasury Board directive," the report said

The province will accept all the auditor general's recommendations in setting a common policy for how executive contracts should be set for government agencies, boards and commissions, Premier Ed Stelmach said, adding there was nothing that could be done about the millions of dollars that were paid out.

"You cannot go [back] on contracts retroactively, that's not fair," he said. "But I said in the house, from the new fiscal period on, we are going to change the rules and also there won't be any bonuses, I also said, until we get back to balanced budgets."

Dunn's report comes on the heels of the public learning about two controversial compensation packages in Alberta in the past month.

Paddy Meade, the former executive operating officer of Alberta Health Services, who was let go in a reorganization in the spring, was paid $1.3 million for nine months on the job — the equivalent of two years' salary and benefits. A $257,500 bonus was included in the payout.

Two weeks ago, it was revealed that Harvey Weingarten, the president of the University of Calgary, stands to collect more than $4 million during the life of his pension after he retires in January.

The report recommends the University of Calgary establish systems to ensure that contracts with senior executives are negotiated and concluded more quickly.

In the report, Dunn repeated his recommendations for improving how Alberta Health Services inspects the province's restaurants and other food establishments.

Alberta Health Services' inspectors must follow accepted standards for the frequency of inspections and do a better job of documenting inspections and following up on critical violations, the report said.

Dunn will step down in February, so Friday's report marks his last as auditor general.