2.3 ERMUSR 05-13-2025______________________________________________________________________________
Page 1 of 1
UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Tony Mauren – Governance & Communications Manager
MEETING DATE:
May 13, 2025
AGENDA ITEM NUMBER:
2.3
SUBJECT:
Policy Update - Utilities Performance Metric Incentive Compensation
ACTION REQUESTED:
Approve recommended updates to policy
BACKGROUND/DISCUSSION:
Recently staff noticed that the last paragraph of the ERMU Policy G.4g1 – Performance Metrics
and Incentive Compensation established the following distribution process.
The UPMIC Performance Based Compensation Incentive distribution will be made to
Qualifying Employees on the first payroll date after the thirty-day period following the
date on which the Commission formally receives its annual auditor’s report in an open
meeting.
Per finance staff, this is not the current practice, as distributions are able to be made within two
weeks of approval of the audit. Per counsel, there is no legal reason why the distribution would
need to be provided as written. Legal counsel did recommend establishing a time window for
distribution so staff would be able to expect the funds within a set period. In order to not
unnecessarily delay distributions and establish that timeline, staff is proposing the following
paragraph replace it.
The UPMIC Performance Based Compensation Incentive distribution will be made to
Qualifying Employees within thirty days of the date on which the Commission formally
receives its annual auditor’s report in an open meeting.
ATTACHMENTS:
• Updated ERMU Policy - G.4g1 - Performance Metrics and Incentive Compensation
51
______________________________________________________________________________
Page 1 of 3
COMMISSION POLICY
Section: Category:
Governance Delegation to Management Policies
Policy Reference: Policy Title:
G.4g1 Performance Metrics and Incentive
Compensation
1.0 PURPOSE AND SUMMARY
The successful performance of the ERMU is measured in terms of the Utilities’ ability to meet
our strategic goals and mission. By improving our efficiency and level of performance in
meeting our strategic goals and mission we can improve the delivery of value to our customers.
To create incentives for employees to take personal responsibility for accomplishment of the
Utilities’ strategic goals and mission, the Utilities has established a Utilities Performance
Metrics-based Incentive Compensation system (“UPMIC”). Through UPMIC the employees of
ERMU will have an opportunity, as a group, to earn annual incentive compensation for each
qualifying employee by contributing individually to the overall success of ERMU on a daily
basis.
Under UPMIC, either all qualifying employees will earn an incentive compensation distribution
in a given year, or none will. And not only will incentive compensation under UPMIC in that
sense be an all or nothing proposition each year, but there will be an equal percentage share basis
for all on which the incentive compensation will be paid out if earned. This appropriately reflects
the reality that we all succeed, or fall short, together as a team.
To administer the UPMIC and measure objectively the level of performance that must be
achieved for qualifying employees to earn incentive compensation, the attached UMPIC
Performance Metrics Policy Scorecard (“Scorecard”) has been created. The Scorecard will be
subject to revision annually based on the performance metrics adopted by the Commission
annually for the coming year (“Performance Metrics”). By tracking and measuring the
Performance Metrics and creating incentive for employees to achieve the goals the Metrics
embody, the Utilities believes it will be better able to focus efforts and resources on becoming
more efficient and successful in meeting our strategic goals and mission and delivering improved
value to our customers.
52
ERMU Commission Policy – G.4g1 Performance Metrics and Incentive Compensation
______________________________________________________________________________
______________________________________________________________________________
Page 2 of 3
2.0 UTILITIES PERFORMANCE METRICS SCORECARD
As reflected on the Scorecard, the Performance Metrics are divided into the following five
categories: Safety, Reliability and Quality of Utility Services; Workforce Development;
Financial Goals; Communications/Customer Service; and Strategic Plan. These categories are
used to characterize the overall strategic goals and mission of ERMU.
Under the Performance Metrics, these five main categories are then divided into various
weighted factors, or sub-categories. These sub-categories, their percentage weight, and the goal
or target for each, shall be established by the Utilities Commission annually. The Performance
Metrics as adopted are reflected in the attached Scorecard. As discussed above, the Performance
Metrics and thus the Scorecard are subject to modification and adoption by the Commission
annually, which will normally occur during the Utilities’ budgeting process.
3.0 UTILITIES PERFORMANCE INCENTIVE COMPENSATION DISTRIBUTION
CRITERIA
Under the UPMIC a Performance-Based Compensation Incentive, if earned, will be distributed
to Qualifying Employees annually. The total amount available to be earned by Utilities
employees as a Performance Based Compensation Incentive each year will be an amount up to
2% of the Utilities’ total gross wages paid to Qualifying Employees during the Measurement
Period.
The measuring period used to calculate how much, if any, of the Performance-Based
Compensation Incentive the Utilities employees have earned will be the calendar year (the
“Measurement Period”). After the Measurement Period is complete and the Commission has
received its audit in the spring of the year following the Measurement Period, the Performance
Metrics will be applied to determine whether the Performance-Based Compensation Incentive
has been earned for the Measurement Period. In doing so, the performance of the Utilities in each
sub-category will be reviewed. If the sub-category performance meets or exceeds the established
goal, the sub-category will be scored with the designated percentage that will contribute to a total
Performance Metrics Multiplier to be used as a factor in calculating the distribution earned, if
any, as shown in the Scorecard (“Multiplier”). The Multiplier has a maximum factoring effect of
100%. The Multiplier is used to determine how much, if any, of the amount established by the
Commission for the UPMIC Performance-Based Compensation Incentive has been earned in the
Measurement Period. (For example, if the Multiplier equals 100%, the distribution would equal
2%. If the Multiplier equals 75%, the distribution would equal 1.5%.) In other words, the
amount established by the Commission may be earned on an annual basis by the group of
Qualifying Employees (as defined below in Section 4.0) in whole, in part, or not at all.
After the Multiplier is calculated on the Scorecard, the Performance Based Compensation
Incentive earned, if any, will be distributed to Qualifying Employees. The total amount to be
distributed as the Performance Based Compensation Incentive will be the product of: a) the
Multiplier; and b) 2% of the Utilities’ total gross wages paid to Qualifying Employees during the
Measurement Period.
53
ERMU Commission Policy – G.4g1 Performance Metrics and Incentive Compensation
______________________________________________________________________________
______________________________________________________________________________
Page 3 of 3
The percentage of the Performance Based Compensation Incentive awarded to each Qualifying
Employee will be based on the gross wages of each Qualifying Employee during the
Measurement Period. To each Qualifying Employee, the distribution would be allocated in a
lump sum equal to the product of: a) the Multiplier; and b) 2% of that employee’s gross wages
paid during the Measurement Period. For example, if a Qualifying Employee’s gross wages
earned during the Measurement Period were equal to $50,000 and the Multiplier was equal to
100%, the total distribution to that employee would be equal to: $50,000 x 2% x 100% = $1000.
If the Utilities’ margins are negative due to sudden and unforeseen material changes to the
industry or customer base, the Commission reserves the right to withhold distribution of the
Performance Based Compensation Incentive in any given year.
4.0 EMPLOYEE QUALIFICATIONS AND DISTRIBUTION OF THE INCENTIVE
COMPENSATION
An employee of the Utilities will be eligible for participation in the Performance Metrics
Incentive Compensation distribution if the employee meets the following eligibility requirements
and is therefore a “Qualifying Employee” for purposes of this policy.
a. The employee is in good standing with the Utilities. An employee would not be eligible
while on disciplinary probation or a performance improvement action plan.
b. The employee was a Full Time or Part Time employee during the Measurement Period.
Seasonal, and Temporary employees are not eligible.
The UPMIC Performance Based Compensation Incentive distribution will be made to Qualifying
Employees on the first payroll date after thewithin thirty days period following of the date on
which the Commission formally receives its annual auditor’s report in an open meeting.
POLICY HISTORY:
Adopted December 12, 2012
Revised January 14, 2020
Revised December 13, 2022, effective January 1, 2023
Revised December 12, 2023, effective January 1, 2024
Revised December 10, 2024, effective January 1, 2025
Revised May 13, 2025
GP:3300714 v4
54