B.C. Rail offers big bucks to bosses
Source: Les Leyne, Times Colonist
Published: July 23rd 2008
Kevin Mahoney and his lieutenants must be the
highest-paid railroad barons in the history of
transportation, if you measure salaries in relation
to kilometres of track.
Mahoney is the president and chief executive officer of B.C. Rail.
If you thought B.C. Rail disappeared after the government sold it to CN in 2004, you thought wrong.
It's still chugging along as a government-owned entity. And as the recent report on public-sector compensation makes clear, it's still paying major-league salaries, despite being strictly a minor-league operation.
If you thought there was some vague correlation between a railway president's pay and the size of the actual railway, you're wrong.
B.C. Rail's operations now consists of precisely 39 kilometres of track, from Roberts Bank near Tsawwassen to Surrey.
It's little more than a hobby railway. A $50 cab ride would take you from one end to the other.
For overseeing that leftover spur and doing a few other things, Mahoney was paid $570,000 last year.
A former vice-president, who was paid out part way through the year collected $333,000. Another vice-president was paid $242,000. The head of a related company, B.C. Rail Properties, received $273,000.
Many public entities were required this year to publish compensation disclosure statements. If the purpose is to justify the stratospheric salaries, B.C. Rail's effort is a complete flop.
"The mandate was evolving during 2007," the Crown corporation's statement begins. The primary mandate has only partially to do with railways.
Instead, it is "to support and facilitate the B.C. Ports Strategy and Pacific Gateway Strategy, by providing consulting advice, acquiring and holding railway corridor and strategic port lands, and making related infrastructure investments for the province."
So it's an industrial real estate holding company and consulting firm at the beck and call of the government, which oversees a tiny railway on the side.
It retains ownership of all former B.C. Rail lands and track, but that is strictly nominal. The $1-billion deal handed over virtually the entire operation to CN.
And managing the little leftover spur line over which B.C. Rail did retain control doesn't sound like much work. It's not connected to the main line and B.C. Rail does not operate any of its own trains on it. "It simply owns and maintains the track, dispatches other train traffic, and collects user fees to help recover costs."
That description was released when the little rail line hit the news in a big way four years ago. The RCMP visited the government while it was trying to unload the line and told it "there may be problems."
The police visit was part of the investigation into corruption allegations around the sale of the line. The exact problem was that confidential information had leaked to one of the bidders, which tainted the whole process. That prompted the government to suspend the request for proposals, which is the only reason B.C. Rail is still involved in the railway at all.
That involvement is part of the responsibilities that cost more than $1.5 million in executive compensation last year.
As part of the disclosure process, the corporation was obliged to set out its "pay philosophy." In the president's case, it means a salary of $275,000, plus an incentive plan payout of $137,500, plus an RRSP contribution of $123,505, plus $33,970 in other benefits, to a total of $569,975.
In a passage straight out of the Dilbert cartoons, the board said it cancelled the incentive payments for everyone at B.C. Rail except executives and senior management. "The primary reason for this decision was that with the evolving mandate, it had become increasingly difficult to establish meaningful and measurable performance targets upon which bonus eligibility could be determined."
That sounds to me like nobody's quite clear what they're doing.
So only the people at the top who are supposed to make it clear will continue to get lavish bonuses.
Just So You Know: The mandate is likely muddled because the operation's future is unclear pending the outcome of the corruption trial. So they're paying the boss $570,000 a year to provide strategic real estate advice and run a 39-kilometre railway that they can't do much with until the never-ending Basi-Virk case is wrapped up in some fashion.
In recognition of these difficult times, the board voted last spring to trim the executives' bonuses by five to 15 per cent and cut discretionary allowances, lunch club memberships and their golf memberships.