“Much ado about nothing”- ‘Bolton Report’

Originally published 20 March 2017


This is a story about a government announcement in the early days of the Prentice administration that I took very seriously. (As it turns out I shouldn’t have.)  Since the Report arising from the announcement was never released, I undertook to bring it to the light of day through the access to information process. It took ten months.

The tale below summarizes the background to the announcement; the enjoyable and lengthy process to receive a copy of the Report; and summary of the report; and my comments on the contents of the Report and recommendations  An earlier column can be found at The Bolton Committee.


On 25 September 2014, the late Premier Jim Prentice issued a press statement that the government would begin a review of all agencies, boards, and commissions “to ensure they are performing for Albertans.”  Fifty-two agencies reporting directly to the government and 142 other agencies covered by the Alberta Public Agencies Governance Act were to be reviewed. The review’s terms of reference were the examination of: (1) governance; (2) director appointment processes; (3) president/CEO assessment processes and succession planning; (4) risk management strategies; and (5) conflict-of-interest policies. Prentice stressed his government was committed to “strong public agency board governance, accountability and transparency.”  The press release also included the observation that “Under my leadership, your government will ensure the best Albertan for the job is appointed. Political party affiliation is not a relevant consideration.

The then Premier announced that Hugh Bolton, Chair of Capital Power and erstwhile director of CNR and TD Financial group,  would chair a panel to examine the provincial government’s largest “financial institutions”: ATB Financial (ATB); the Alberta Investment Management Corporation (AIMCo); Agriculture Financial Services Corporation(AFSC); and the Alberta Capital Finance Authority (ACFA). The government expected the report within two months or by the end of 2015.  Also appointed to the panel was Linda Hohol, a director of Canadian Western Bank, a former director of ATB and Alberta Health Services, past President of the TSX Venture, and former Executive Vice-President at CIBC. The third member was Larry Pollock, the former President of Canadian Western Bank (CWB) and a director of EPCOR and Westjet. In selecting these three, Prentice had chosen persons with a deep knowledge of banking, finance and close ties to the Canadian and Alberta corporate establishments.    All three members of the panel accepted $1 for this significant assignment. Since Hobol and Pollock were conflicted on ATB, given their CWB ties, only Bolton conducted the review of ATB.

Based on brief conversations with the three panelists, I was able to determine a report was delivered at the end of February 2015. The report was never publicly released- until now.

Why the review?

The announcement came as a surprise to public sector watchers for two reasons.  Firstly, the question of provincial agency governance did not appear in the five priorities identified by Prentice during his 2014 leadership campaign. Secondly, a review of Board governance at provincial agencies, boards and commissions (ABCs), had been undertaken and completed in 2007. The final report was entitled At the Crossroads. (This was the same title chosen by the Royalty Review committee appointed in 2015 and led by Dave Mowat, President and CEO of ATB Financial.)     That committee was chaired by Neil McCrank, the former Deputy Attorney General, Allan Tupper, a respected political scientist from the University of British Columbia and Linda Hohol.  The final report, completed in October 2007, looked at inter alia: classification of ABCs; roles, responsibilities and accountability of ABCs; and appointment, evaluation and remuneration of CEOs and board members.  What was surprising is the overlap between the mandates of two committees appointed within a relatively short timeframe.

Evidently there had to be some concerns within Prentice’s inner circle about the quality of corporate governance in some of these ABCs.  Below we will see what the Bolton Committee found out about the four institutions they were asked to inquire into. The reason for asking the Committee to report within two months was also intriguing. These organizations- particularly ATB and AIMCo, are extraordinarily complex with very complex information technology systems managing over $100 billion in financial assets and liabilities.  These financial assets and liabilities (especially pension liabilities and deposits) must be “matched” to ensure that when depositors want their money back, they can access it or pensioners receive their monthly pensions on time.

Freedom of Information Request (FOIP) (or why did you put me through this process?)

On 9 March 2016, a request was initiated with the Executive Council’s FOIP Co-ordinator to obtain the Bolton Committee report. At the end of May the Executive Council rejected the request since section 24(1) of the Freedom of Information and Protection of Privacy Act gives the government discretion to not release information that is “advice, proposals, recommendations, analyses, or policy options developed by or for a public body or a member of the Executive Council.  No reason was given in the letter for the use of this discretion. 2016-G-0065 – Final Release PackageBolton Report. Therefore just the press release was provided.

On 14 July a request for review was initiated with the Office of the Information and Privacy Commissioner. On 20 September, in a letter to Bob Ascah and Premier Notley, Jill Clayton, the Information and Privacy Commissioner (OIPC) authorized an investigation into the matter. The Commissioner ordered Executive Council to submit redacted and unredacted copies of the record to their offices by 12 October 2016.  The date of the completion of the review was slated for 11 January 2017, or nearly 10 months after the initial FOIP request to Executive Council.  On 8 December, Executive Council again confirmed its earlier decision to withhold the records. A month after receipt of this second rejection, the OIPC advised that its review would take until 22 February to complete.

After the OIPC reviewed the file, the Executive Council sent the draft report noting: “(A)fter conducting a secondary review, under the exercise of discretion, we have determined that additional information is suitable for release. ..However, some of the information in the records will remain subject to section 24 (Advice from Official) and will continue to be withheld under the original FOIP application. OIPC 003709 Mediation – Additional Records  Six pages continue to be withheld suggesting this material is the analysis to the Premier by Executive Council about the Bolton “draft” report. Given the uncontroversial nature of the content (discussed below), it is remarkable why Executive Council failed to release the material during the May-June period when originally asked.

The Draft Report of March 2015

The report on four of the most complex provincial agencies totaled 14 pages including a three page executive summary and a title page. The Report was marked “draft.” There were eight sections addressing:

  • (1) mandate and roles;
  • (2) board member recruitment;
  • (3) Board evaluation;
  • (4) President/CEO compensation, evaluation, and succession planning;
  • (5) risk management;
  • (6) code of conduct and conflict of interest policies and practices;
  • (7) strategic direction; and
  • (8) relationship with the minister.

Given the brevity of the report, there are no specific sections on these four agencies and so the reader is never sure whether recommendations apply to one or all of the agencies (with the exception of a few specific cases noted below). In the following sections, the discussion and recommendations in the Report are summarized followed by a commentary.

Mandate and Role 

The importance of a mandate and roles document, as required under the Alberta Provincial Agencies Governance Act (APAGA), was reviewed with the boards and AIMCo was to complete the document during 2015.  The Panel recommended that these ABCs should meet with the responsible minister on an annual basis to review the document to “ensure it is current and effective.” More significantly, the purpose of each financial mandate (e.g. financial services to farmers) should be reviewed “to determine if the financial services provided to Albertans should be delivered through an arms-length agency or directly by a department.”


The second recommendation is fascinating since it assumes that the financial services offered by these agencies should remain in the public sphere  rather than pursuing the question of whether the Alberta government should be in the deposit-taking business, for example.  Indeed, the announcement did not ask the members to review the mandate and roles document, although mandate could be considered under “board governance.”  Governments, including politicians and senior bureaucrats policy guard their policy mandates. This recommendation perhaps hints at moving the Agriculture Financial Services Corporation (AFSC) or Alberta Capital Finance Authority into a ministry operation or conceivably centralizing agricultural lending by the provincial government under ATB with its large branch network in rural Alberta. Given the AFSC board’s removal last June, it is possible the government may integrate its operations into Agriculture and Forestry or Treasury Board and Finance. ACFA could also be formally integrated into either Municipal Affairs or Treasury Board and Finance,  thereby abolishing the board, and eliminating any conflicts of interest with municipal representatives (discussed in a later section of the report).

Board Member Recruitment

The Report discussed the importance of qualified individuals, the desirability of a “skills matrix,” staggered board terms, and successions-planning. The recommendation which flow are the most prescriptive of the Report. The recommendations placed the onus on the board chair to lead the recruitment process with a ministerial sign-off. “Board appointments should be based on merit and reflect the diversity of Alberta’s population.”  Succession planning should mitigate the risks that board turnover may cause. Boards should be able to recommend only one candidate per vacancy and only provide the name of a second candidate if the minister does not approve the first name.


The authors seem to believe that except for ACFA where city and deputy ministers sit on the board, and are outside the control of a “skills matrix,” the incumbent boards are best suited to oversee the recruitment process because the board will best be able to protect the merit principle. Unfortunately, the panel did not address at all the partisanship question specifically raised in Prentice’s release. Thus the panel failed to complete a key part of its mandate. What has been the situation at AIMCo (2008) and ATB (1996)  over the past decades or two?

At ATB, except for Mike Percy, Paul Haggis, and Robert (Bob) Clark, all appointees with known political affiliations had political connections with the governing party. In the case of Percy and Clark, both individuals served under P.C.  governments:  Percy as Chief of Staff to Premier Jim Prentice, and Clark as Ethics Commissioner to Ralph Klein. In 2014, Haggis donated to Jim Prentice’s leadership campaign. For all intents and purposes all directors with known political affiliations can be said to share similar “conservative” values.

What is striking is that the initial board at ATB had few partisans. This was the result of a deliberate decision taken by then Treasurer Jim Dinning to appoint a committee led by Liberal Louis Desrochers and Dean Michael Maher of the University of Calgary’s business school to select the first board. Commencing in 1999, however, 12 of the next 16 appointments were known Progressive Conservative supporters. Of those four who had not donated money to the Progressive Conservative Association of Alberta, two had served, and would serve, on five or more other provincial agencies or committees. Those individuals, without documented partisan ties, clearly held the trust of the government (Al O’Brien, Art Froehlich).

There appear to be several factors at work to explain the predominance of PCs on ATB’s board. First of all, the process for vetting new directors was undertaken by a committee of the board who would then make recommendations to the Minister. This appears to have relied on the “old boys” network and shows up in a set of appointments of men with backgrounds in agriculture, including the third chair of the board, Robert Splane. Secondly, until term limits were legislated under the Alberta Public Agencies Governance Act, no limits were set and the expectation was that members would be re-appointed for another three-year term without any external, transparent review process other than by the Board Chair and the Governance Committee Chair.

With the publication of the McCrank report and requirements for open advertising, and with a supposedly more rigorous appointments process involving outside expertise, one would expect subsequent appointments to be less partisan. Since 2008, eight of 15 directors have PC connections, including Mike Percy, have governing party credentials.  Joan Hertz, the first appointment under an “open process,” was a lawyer and consultant, who served as secretary to the PCAA. Wayne Wagner, a cement company executive who, or whose company, donated $10,000 to Premier Stelmach’s leadership campaign, was appointed in 2008. Collette Miller, appointed in 2009 from the then Premier’s Vegreville constituency donated $6,308 to the PCAA from 2007 to 2013, through her professional corporation. Bob Carwell, Premier Stelmach’s leadership campaign head, was appointed in 2011.Linda Hohol, a former executive vice-president of CIBC and President of the Alberta Stock Exchange and then the Venture Exchange has also given significant sums to the PCAA and to leadership candidates.

AIMCo’s Alberta board members too had close ties to the PCAA (see “Baby Steps for AIMCo’s board”).  It is therefore odd that the panel did not investigate the degree of partisanship at these agencies.

Board Evaluations

The Report recommends a formal annual evaluation led by the Board Chair and Chairman of the Governance Committee. In addition, an external evaluation should be carried out every three to five years.  Board attendance and remuneration should also be included in the annual reports of the agencies.


Such recommendations have been standard fares for many years and requirements of securities regulators for at least a decade. The report did not deal with disputes between directors nor did it address the question of poor performance of directors. The absence of any hint of problems at AFSC is suggestive of not enough time, mandate scope, or staff assistance to the panel to deliver in-depth, critical analysis, and recommendations.

President/CEO Compensation, Evaluation and Succession Planning

The Panel recommended a “total compensation approach.. using in-class, and similar or like comparators benchmarked against both the public and private sector.” Yearly performance evaluations should be undertaken against performance objectives put in place by the board and “in collaboration with the president/CEO.” The panel also recommended disclosure standards should be the same as private sector competitors and severance payments should be disclosed in the annual report.  In addition, the Human Resources committee of the board should oversee executive succession and compensation.


These recommendations, except for improved disclosure, are consistent with existing practices. The Panel accepted uncritically the arguments of the existing boards that pay must be comparable to private sector “competitors”.  The fact that these public financial institutions are granted a monopoly, as in the case of AIMCo to manage pension funds and the Heritage Fund, suggests more of a public sector wage should be sufficient to attract quality managers.  In the case of AFSC and ATB, these organizations enjoy the provincial credit rating and are given their capital by the government or earned through net income. The leaders of other equally complex organization like the Bank of Canada, the Export Development Corporation, or Business Development Bank are currently not drawing the level of salaries and benefits of executives at AFSC, AIMCo, and ATB.

The current government is partially addressing this imbalance by the introduction and passage of Bill 19 last year. On 24 February, Joe Ceci announced changes to compensation at 23 of Alberta’s ABCs. Such changes are designed to save $16 million and included the elimination of executive bonuses, executive market modifiers, retention bonuses”golf club memberships and housing allowance and benefits like private health care access. In other words the “total compensation approach” was rejected at agencies including AFSC, the Alberta Energy Regulator, and the Alberta Securities Commission.

New Leadership at embattled Alberta agriculture agency28-4-17 EJ

However,  ATB and AIMCo (and the Alberta Teachers Retirement Fund -ATRF) are regarded as a “special case” because, according to the release, the agencies “have direct private sector counterparts, such as banks and investment firms. Their compensation must be designed for the specialized financial market in which they operate, while demonstrating alignment with government’s compensation principles.”  Here again is the uncritical acceptance of the notion of “private competitors” which flies in the face of public ownership and stewardship of agencies granted monopoly status or that have access to the provincial government’s “credit card.” Evidently, golf memberships, retention bonuses, market modifiers, and access to private health care may be ok when “competing for ‘talent’ with the private sector.”  AIMCo, Alberta Health Services, ATRF, and the Alberta Electric System Operator will be required to submit executive compensation plans annually.

[The Bolton Report also inaccurately claimed that the base salary of the CEO of ATB is “set by legislation.”  When the Alberta Treasury Branches Act was proclaimed in October 1997, the salary was established through Order-in-Council and the appointment of the CEO by Order in Council as well on the recommendation of the Board. In 2007 when the current President of ATB was appointed, his base salary was set by Order in Council. However, in 2009, the ATB Board was given final say on base salary subject to any regulations under APAGA.]

Risk Management 

The panel undertook “a substantial review of the risk management practices of each institution.” The Report noted the important role to be played by a risk management committee of the board in establishing policies including “risk tolerance” and delegated authority for the corporation. The Panel members did recognize the backing of the provincial government and, given that support, “the risk management function should be a (sic) rigorous as those found in private institutions.”  Recommendations included: the creation of a Chief Risk Officer and Chief Compliance Officer, a risk committee of the board; an internal audit function that could meet in camera with the risk committee; and a “risk appetite statement.”


Since the Report was structured to speak generally about all four agencies, it is concerning that these very basic principles of risk management may not in place at all institutions. Annual reports disclose that most of these institutions, particularly AIMCo and ATB, have already these functions. A key consideration however, missed by the Panel, was the potential impact of executive compensation structures on risk officers, chief financial officers, and internal audit staff, particularly around the recognition of loan losses or revenue. In other words, is executive compensation for these “control” officers sufficiently different to allow these officers not to be influenced by large pay-days when more prudent provisioning or valuation of investments or loans, are professionally required?

Code of Conduct and Conflict of Interest Policies and Practices

The Report reviewed standard practices respecting the annual sign-off by employees and members of the board. The issue of ACFA board representatives from municipal government that borrow from the ACFA was raised. The report recommended that the ACFA simplify its Code of Conduct but it was unclear whether  current policy requires an affected member to recuse themselves. Other recommendations included that orientation programs for directors be included the Code of Conduct and Conflicts of Interest policies.  Another suggestion was that the Board Chair ask directors whether they have a real or perceived conflict on any agenda item at the beginning of every meeting.


It’s remarkable that orientation programs would not include such a module and unclear which agency is not stressing this aspect of board governance.

Strategic Direction 

The Report recommended that the Board should review and confirm the strategic direction annually and hold management “strictly accountable” for meeting goals set out in the plan.


Oddly, no mention is made whether the Minister should agree to the “strategic direction.” Strategic direction, insofar as it affects the policy mandate of the agency, is a closely guarded prerogative of the Minister.

Relationship with the Minister

According to the Report “(E)ach of the financial institutions made positive comments about its relationship with the minister” while noting the high level of turnover of ministers and deputy ministers. The Report recommended an annual meeting between the CEO, Board Chair and Minister/Deputy Minister or when the Minister of Deputy changes. In addition, a workshop should be held to allow ministers and delegates to “better understand their roles and responsibilities.” Finally the roles and mandate document should state the relationship, interaction and communication desired between board, chair, minister and deputy.


This final section (and the first section of the Report) covers material that was laid out with the passage of APAGA in 2009.  Section 3 of the Act reads:

3(1) Every public agency must, within 3 months of its
establishment or continuation, have a Mandate and Roles
Document that is jointly developed by the public agency and its
responsible Minister and that includes a description of each of the
(a) the public agency’s mandate;
(b) the roles and responsibilities of
(i) the public agency,
(ii) its members,
(iii) its chief executive officer, if any,
(iv) the responsible Minister,
(v) any departments or employees of the Government of
Alberta that provide support or services to the public
agency, and
(vi) any subsidiaries of the public agency,
including roles and responsibilities in respect of recruitment,
orientation and training of members, communication with
the public and evaluation of the public agency’s and its
members’ performance;
(c) the accountability relationships of the public agency,
including its duty to account to the responsible Minister;
(d) the process for administering the public agency’s code of
(e) the public agency’s and the responsible Minister’s mutual
expectations in respect of communication, collaboration and
consultation with each other;
(f) the committee structure of the public agency, if any;
(g) the financial, staffing and administrative arrangements for
the public agency;
(h) the public agency’s planning and reporting requirements;
(i) any other matters specified in the regulations.

(2) A Mandate and Roles Document may be amended at any time
by the public agency and the responsible Minister.

(3) A Mandate and Roles Document and any amendment made to
it must be signed on behalf of the public agency and by the
responsible Minister.
(4) A Mandate and Roles Document must be reviewed and
renewed, amended or replaced within 3 years after the day on
(a) the Mandate and Roles Document, or
(b) the most recent amendment to the Mandate and Roles
Document, was signed.


Governments typically do not make announcements without a reason. After reading the press release and then the Report, one has to ask the question- “what was the problem that Mr. Prentice was seeking advice on?” Apart from recommending processes that were standard corporate fare, already legislatively required, or already being done by these organizations, the only substantive recommendation was for improved disclosure on compensation. This measure for improved compensation disclosure had been previously recommended by the Auditor General in his 2008 and 2009 reports. Nor did the Committee seem interested in touching the partisanship aspects of appointments.

With the Report now in the public domain how should we view board governance, risk management, and executive compensation at these four important agencies? It would appear that apart from some tweaking things are fine. Still, one has to wonder whether the panel members had any inkling of the serious problems at AFSC’s board and executive management that came to light a year later. (See News Release and Report of Alberta’s Chief Internal Auditor .)

For a detailed, unpublished report on Executive Compensation and Board appointments at ATB, AIMCo, the Alberta Securities Commission, and the University of Alberta go to unpublished study at Albertarecessionwatch.com. (Note: Data on salaries and benefits subject to revision.)

This entry was posted in Agencies on by .

About albertarecessionwatch

Former Director, Institute for Public Economics, University of Alberta and currently Fellow of the Institute. Former executive with Alberta Treasury Branches. Worked for the Alberta government for 12 years with Federal and Intergovernmental Affairs and Alberta Treasury. Areas of focus: financial institutions legislation and policy, government borrowing, and relations with credit rating agencies. Ph.D in Political Science (Uof A), Masters of Public Administration and BComm. (Carleton University). Author of Politics and Public Debt: The Dominion, the Banks and Alberta's Social Credit. Presently working on study of Alberta provincial agency board appointments.

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