Methodology and References

In order to spare people the boredom of sifting through paragraph after paragraph of detailed explanations as to how I arrived at the conclusions I present in this blog, I will post the methodology and references for each post here.  That way, the speed reader can take the conclusions on faith whereas the more detail oriented can dig a little deeper.  And please, if you find any inconsistencies or logical fallacies in my explanations, please comment or e-mail  I’d be happy to respond to any criticism.

1.  Twelve in Twenty

All population figures come from Alberta Municipal Affairs population lists.  Within these lists, the figures for federal censuses are the most reliable and, as such, were used in calculations.  The population figure for Peace River for 2011 was downgraded by Statistics Canada shortly after publication of Census 2011 results.  The corrected figure is used.

Towns in Alberta with current populations between 5000 and 10000:

Banff, Blackfalds, Bonnyville, Coaldale, Devon, Drayton Valley, Drumheller, Edson, Hinton, Innisfail, Morinville, Olds, Ponoka, Redcliff, Slave Lake, St. Paul, Stettler, Taber, Vegreville, Wainwright, Whitecourt.

Growth figures calculated using compounded annualized growth.  If a town grows from 5000 to 10000 in 10 years, it has grown 100% over 10 years.  This does not mean it has grown 10% per year.  It has grown 7.18% per year.  10% per year growth would lead to a population of 12969 at 10 years.  To get an annualized growth rate, you have to use a formula somewhat like the compound interest formula.  Go here to play around with some numbers.

Taxation figures referenced from publicly available Town of Peace River financial statements.

2.  Borrowing for the Future

All figures for Peace River taken from same financial statements as above.  All dollar figures converted to constant 2013 dollars to remove impact of inflation.  2013 figures are projections based on the 2013 Town budget.  Since the last 2 years of financial statements have shown roughly $500k repaid in long term debt, I extended that to 2013 as well.  Thus, the debt figure I used was the 2012 reported long-term debt, plus the debenture of over $2m reported in the 2013 budget, minus a projected repayment of roughly $500k.  The time series uses the definition of revenue from Alberta Regulation 500/00.  As this was sometimes hard to pull out of the financial statements, I used the debt limit figure reported and divided that by 1.5 which gives you the revenue figure Municipal Affairs uses to calculate the debt limit.  This does not take into consideration additions to the revenue streams as reported in my post on revenue growth but is what the government uses, so it is what I will use.  Assessment figures come from Municipal Affairs municipal profile of Peace River.

For the cohort comparison, the same towns as listed above were used as comparators.  2012 debt figures reported in town financial statements were used, as well as the population figures from the 2011 federal census.

3.  Where did it come from?

Cities defined per Municipal Affairs municipal profiles.  In descending order of total salary including benefits, the figure used for our CAO, they are: Calgary, Red Deer, Edmonton, Lethbridge, Spruce Grove, Medicine Hat, Leduc, Grande Prairie, Fort Saskatchewan, Cold Lake, Airdrie, Lacombe, St. Albert, Brooks, Wetaskiwin, and Camrose.  In this rank, Peace River would fit between Medicine Hat ($288000) and Leduc ($270810).

Data for comparative analysis taken from the financial statements of each town in Alberta between 5000 and 10000.  I obtained the salary of their CAO, as well as assets, liabilities, net assets, accumulated surplus, revenue, expenses, and net excess or deficit.  From Municipal Affairs I obtained their equalized assessments and number of paid town positions.  From the federal census I obtained 2011 population figures and from Google Maps the distance from either Edmonton or Calgary, whichever was closer.

Salaries in other financial statements were calculated as the TOTAL salary including benefits, allowances, and bonuses.  As such, the $273684 figure was used for the Peace River salary.  Furthermore, the experience and excellence of the current CAO has been put forth numerous times by those who voted in favour of his contract.  As such, it stands to reason that this bonus will be given.  Regardless, removing the bonus changes the graphs almost not at all and does not alter the standing of the salary within the market aside from moving ONE city above it, Leduc.

“Expected” salary calculated using two methods.  First was calculating the expected Y-value given X for the best fit linear equation for each metric.  The resulting figures were then averaged to give a blended average.  Multiple linear regression was also used to give another figure. This formed the range reported.

To ensure that comparative analysis is considered good practice in executive compensation, I looked at multiple references.

United Nations


Brown University

Executive Pay Guidelines for Non-Profits

Human Resource Council

2 Responses to Methodology and References

  1. Pingback: Twelve in Twenty | Peace River Votes 2013

  2. Pingback: Where did it come from? | Peace River Votes 2013

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