OAC Board - December 14, 2017
2018 Consolidated Annual Financial Operating Plan Recommendations
Each year, the OAC Board approves the Operating Plan and Benchmarks used by Management to assess financial performance in the year ahead. Following a question and discussion period and as recommended by the Audit & Actuarial Committee at its meeting held on December 6, 2017 and by the Investment Committee at its meeting held on December 7, 2017, the OAC Board approved the 2018 Consolidated Operating Plan with a net projected income of $6.892 billion and a net return of 7.3%.
Statement of Investment Authorities
The Statement of Investment Authorities ("SIA") sets out how investment authority is delegated to the CEO from the OAC Board. The SIA was last reviewed by the OAC Board on December 15, 2016.
Management proposed several amendments intended to clarify debt limits.
As recommended by the Investment Committee at its meeting held on December 7, 2017, the OAC Board approved the Statement of Investment Authorities, effective January 1, 2018. In accordance with OAC’s practice, the SIA is posted on the OMERS website.
Statements of Investment Policies & Procedures
Based on the annual review of the Statements of Investment Policies and Procedures (SIP&Ps) by senior management and internal and external legal counsel, the OAC Board approved the Primary Pension Plan SIP&P, the Supplemental Plan SIP&P and the RCA SIP&P effective January 1, 2018. In accordance with OAC’s practice, these policies are posted on the OMERS website.
Risk Appetite Statement
The Risk Oversight Committee was established by the Board as an ad hoc Committee on June 29, 2017 and was charged with overseeing the development by Management of key elements of the risk framework and in particular a risk appetite statement.
Management worked on the development of a risk appetite statement for the Primary Plan, and information sessions which focused on the main concepts, the proposed key principles and the conceptual metrics used to measure risk appetite were held with the OAC Board on a number of occasions. Following six meetings of the Risk Oversight Committee held from July to December 2017, the Committee was ready to recommend a proposed risk appetite statement to the Board for approval.
Following a question and discussion period, and as recommended by the Risk Oversight Committee at its meeting held on December 11, 2017, the OAC Board approved a risk appetite statement for the Primary Plan, effective January 1, 2018.
Enterprise Risk Report – Q3 2017
The Enterprise Risk Report to the Board provides an overview of each risk category. Since Q2, significant progress was made with the development of a Risk Appetite Statement which will, along with evolving risk measurement, support future improvements in risk reporting to the Board.
The OAC Board approved the Q3 2017 Enterprise Risk Report.
Competency Framework and Skills Matrix
At its August meeting, the OAC Board approved an updated Competency Framework and directed the Governance Committee to evaluate the self-assessments prepared by each OAC Director and complete a Skills Matrix identifying the competencies of each Board member. The Committee conducted this assessment at a special meeting held on August 29, 2017, followed by additional discussions with several individual Board members. Those discussions were completed and the results were included in the updated Skills Matrix which was approved at the November 15, 2017 Governance Committee meeting.
The Sponsors Corporation had an opportunity to review the Competency Framework and related processes and suggested several minor changes which were included in the updated Competency Framework for the Board’s consideration and approval.
As recommended by the Governance Committee at its meeting held on November 15, 2017, the OAC Board approved the updated Competency Framework, reflecting comments from the OMERS Sponsors Corporation, effective December 14, 2017. The OAC Board also authorized and directed the OAC Board Chair and the Chair of the Governance Committee to participate in such discussions as may be required with the OMERS Sponsors Corporation and Sponsor Organizations relating to the Competency Framework and Skills Matrix.
Risk Management Mandate
A mandate for the Risk Group was approved in 2015. The purpose of the mandate is to make clear the roles and responsibilities of the function and having such a mandate is considered best practice.
The OAC Board reviewed an updated mandate with minor modifications, several of which were due to organizational changes.
As recommended by the Governance Committee at its meeting held on November 15, 2017, the OAC Board approved the Risk Management Mandate, effective January 1, 2018.
Board and Committee Mandates
The Governance Committee annually reviews all Committee mandates (including how Committees see their own roles evolving) and the Board Mandate to assess the full package of Board-level responsibilities and how they fit together.
The Committees all reviewed their respective 2017 mandates and proposed several changes which were forwarded to the Governance Committee for review at its November 15, 2017 meeting with the objective of the Governance Committee making a comprehensive recommendation to the OAC Board regarding all mandates.
As recommended by the Governance Committee at its meeting held on November 15, 2017, the OAC Board approved the Board and Committee mandates, all effective January 1, 2018. Mandates are posted to the OMERS website.
The simplified Communications Policy was approved by the Governance Committee in 2015 and reapproved in 2016. Management now believes that the Communications Policy no longer requires specific Board or Committee approval and, as such, could be delegated to Management. The Governance Committee would continue to oversee the Communications Plan through regular updates at each of its meetings.
Corresponding changes would be made to the Board Mandate and the Governance Committee Mandate to reflect this delegation. In addition, as a Management-level policy generally does not prescribe conduct by Board members, the Board Member Role Description would be updated to reflect the fact that the Board Chair speaks on behalf of the OAC Board regarding its decisions.
Following a question and discussion period, and as recommended by the Governance Committee at its meeting held on November 15, 2017, the OAC Board approved the delegation of authority over the Communications Policy to Management effective immediately, and authorized and directed Management to make such changes to the Policy as may be required. The OAC Board also approved the amended Board Member Role Description.
Following discussion, and as recommended by the Human Resources Committee at meetings held on November 15, 2017 and December 12, 2017, the OAC Board approved the following items:
- a revised 2018 CEO Performance Scorecard;
- 2018 CEO Role Description and Competencies, approved without amendment; and
- 2018 CEO Total Compensation Target, approved without changes.