Treasurer Peter Wardle commissioned the report weeks after disclosing CEO employment contract
Two weeks after Law Society of Ontario benchers learned about an employment contract that upped chief executive officer Diana Miles’ base salary to nearly $1 million, LSO treasurer Peter Wardle retained the services of a consulting firm that expressed concerns about a report that had been used to justify Miles’ raise, according to internal LSO documents obtained by Law Times.
In a Dec. 20 review by Towers Watson Canada Inc., the firm told the LSO that a compensation benchmarking report prepared by Arthur Gallagher & Co. recommended a pay increase for Miles that was “unusual in the market and uncharacteristic for a senior executive role.”
The Gallagher report was commissioned by former LSO Treasurer Jacqueline Horvat to review Miles’ compensation. Finalized in April 2024, it concluded that Miles’ pay was significantly below market and should be raised to a range between $749,400 and $1,124,100.
Gallagher said this recommendation was based on market data results, the "transformational" expectations of the CEO role, and Miles’ tenure, according to a Nov. 28 report that the LSO’s compensation committee gave benchers.
The December review by Towers Watson Canada, or WTW, expressed concerns over the data Gallagher drew on to make its recommendation. The review also appeared to express skepticism that Miles held the “transformational CEO responsibilities” that Gallagher cited to justify the CEO’s raise from approximately $714,500 in total cash compensation to a base salary of $936,800.
"The Gallagher approach incorporates several unknowns and interpretations that makes it more difficult to rationalize a base salary approach[ing] $1 million," the WTW review said.
The Toronto Star was first to report on Monday that the LSO had retained outside counsel to conduct a review of Miles’ employment contract. Horvat signed off on the contract in the summer without notifying the LSO’s governing board, known as Convocation. Wardle informed the board’s members, or benchers, of Miles’ contract at the Nov. 28 meeting.
On Dec. 12, Wardle signed an agreement to retain WTW to review Miles’ compensation package. The LSO had previously negotiated a master services agreement with WTW in 2021, the terms of which apply to all services the firm provides to the law society.
The December agreement entailed WTW reviewing external reports that had been used to determine the CEO’s pay, including Gallagher’s. WTW also proposed conducting its own compensation benchmarking report for Miles. However, after Wardle disclosed that he had retained WTW’s services at a Jan. 24 Convocation meeting, benchers voted against this second proposal, according to two people with direct knowledge of the matter but who are not authorized to speak about it.
In addition to assessing Gallagher’s compensation report, WTW looked at a 2019 report that the LSO had previously commissioned from Mercer.
The WTW report noted that Mercer’s benchmarking review was based on data from two groups: public sector organizations, like government, nonprofit, and Crown corporations, and organizations with revenue between $50 and $600 million. The latter category excluded publicly traded organizations.
In contrast, the Gallagher report relied on data from all industries with revenue between $400 million and $1 billion, public sector organizations, and nonprofits. The WTW report noted that Gallagher provided alternative compensation ranges for Miles by using the market data and applying 10 or 20 percent premium increases for being a “transformational CEO.”
The LSO’s revenue is about $100 million, according to its 2023 financial statements report.
WTW said it was unsure what criteria Gallagher used for the comparator data it cited and noted that Gallagher did not remove publicly-traded organizations.
“It is not clear from the information in the Gallagher report that it reflects the right market for LSO,” the report said. “In our view it is more appropriate to use the stronger foundation of the Mercer assessment and build your business case from that market view.”
In a letter that bencher Murray Klippenstein sent to his colleagues in December, Klippenstein said it was “obviously absurd” to compare executive pay at the LSO with that at companies with much higher revenue.
Klippenstein also wrote that while Miles dealt with significant issues at the LSO, the organization is also “highly sheltered from the kinds of market forces and competitive threats which most private sector large organization CEOs must face.” He noted that the LSO has a “captive” base of customers who must pay fees each year to work.
Wardle did not respond to a list of questions by Law Times. The LSO noted that the investigation of Miles’ contract should be ready by the end of February, but said it would not be making any additional comments.
