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BOARD MANUAL

Approved By: Number: 7-10Date Issued: May 25, 2010 Page: 1 of 3Last 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 itsresponsibilities 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 appropriatecompensation for the hospital CEO and Executives and enabling the hospital to recruitand retain experienced, capable and qualified leaders

3. Establish a transparent and defensible basis for CEO and Executive compensationcomparable to other peer organizations

4. Recognize the performance based culture of Grand River Hospital in making decisionswith 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 BoardThe 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 fileand providing insight, feedback and assistance regarding any policy or procedural updatesrelating 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.

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CEO Base Salary compensation will be established in a range which is comparable tosalaries for CEOs in other peer organizations as established by the annual OHA CEOsalary survey

Any changes to base salary, benefits and perquisites will be made effective to thebeginning of the fiscal year.

Goal based compensation will be established with reference to expected performancegoals and high achievement goals developed in consultation with the CompensationCommittee.

Goal based compensation will be assessed as per the compensation plan represented bythe Compensation Committee. The Compensation Committee will present an annualcompensation 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 evaluatingthe performance of each Executive and for setting his or her compensation, taking into accountthe following guidelines:

Executive Compensation will be in the form of a total compensation package including acompetitive base salary, goal based compensation, benefits and perquisites.

The CEO will annually conduct a market review in order to establish the compensationlevels for members of the Executive team. This review will include consideration of the14 peer hospitals which are reviewed as part of the Hospitals financial planning, andmay 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 fordemonstrating that salary ranges for executive positions collectively reflects the marketposition chosen by the board.

The CEO must have prior approval from the Compensation Committee in order toestablish any Executive base salary that is outside the salary range which has beenestablished 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 performancemanagement guidelines and timeframes.

It is recognized Executive Compensation may vary depending upon performance.Therefore, Executive Compensation will be determined through an annual performanceappraisal process.

The CEO will be responsible for conducting annual performance appraisals for eachmember 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 thegoals (i.e. how the goals were achieved) and will include mechanisms for regularfeedback, as well as formal reviews.

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o Performance goals will be established annually based on a combination of individual, team and hospital goals. These measures will be used to evaluateExecutive performance.

o The goals established may be periodically revisited throughout the year if unforeseen circumstances arise and take precedence over goals that weredetermined at the beginning of the year.

o A self appraisal and multi-rate feedback process will be utilized during the annualappraisal process.

Other Related Policies

3-B-10 Roles and Responsibilities of the Board3-C-18 Compensation Committee Terms of Reference5-6 Chief Executive Officer (CEO) Appraisal Process6-2 Performance Measurement and Monitoring Policy