Our friends at the helm of BC Ferries are in the news again over executive compensation issues. Now subject to Freedom of Information, BC Ferries must release salary information that was previously secret. Recent data led Globe and Mail reporter Tamsyn Burgmann to write:
“Senior managers at BC Ferries are hauling in hefty salaries their counterparts at Crown-owned corporations can only dream about.”
Despite a finding by the Comptroller General that excessive salaries resulted from a flawed process in which the recipients helped select the comparators used as benchmarks, their flawed salaries were continued, exempt from rules that apply to new hires.
One scenario suggested to me by a mid-level employee is that top managers of BC Ferries are being rewarded for silence, in the same way the brass of BC Rail were allowed to stay on earning salaries at the top level of public sector executives even though the railway they managed had been sold years before and almost no employees remained outside of the executive offices. Ferry insiders believe the FastCat aluminum catamarans were sold for less than scrap value and parked in North Vancouver for years solely to strengthen BC Liberal claims that the ships were a giant mistake by the preceding NDP government. More about this HERE.
If you question whether or not the Pacific FastCats have been a continuing part of BC Liberals’ strategy, check out Vote Smart BC, an anti-NDP rant maintained by Philip Hochstein’s Independent Contractors and Businesses Association of B.C. This website has an inane feature: Race a Fast Ferry. Hochstein, a bounteous booster of Liberals, is behind American style attack ads intended to raise fears about the recall of Victoria MLA Ida Chong.
In another matter, internal reports uncovered through FOI give a different version of the story about the Queen of Nanaimo dock crash in August, 2010. David Hahn and flak Deborah Marshall initially blamed crab trap lines for the causative fault but BC Ferries internal reports raise concerns about vessel maintenance and safety practices and makes clear the BC Ferries effort to blame crab lines was incorrect, which surprises no one with marine experience.
The following from Northern Insights was published August 13 2010:
Remember a year ago when Shirley Blond, Liberal ditz responsible for BC Ferry Services Inc., claimed she was ‘shocked’ to learn that CEO David Hahn was drawing a seven figure salary and his four lieutenants were taking another $2 million plus between them. That led to the Cabinet sending in a Comptroller General’s hit team, who concluded:
“compensation paid to the executive team members of BCFS in 2008/09 was significantly higher than executives of large public sector entities.”
Salary levels had been set by the BC Ferry Board after a review of comparators that included Coca Cola, Ford, Nike and other huge companies the Comptroller General said were inappropriate. That the salary determination process was flawed is not surprising since, according to the Comptroller General, the salary recipients at BC Ferries had:
“significant input into the selection of the comparators a consultant used as benchmarks, which raises questions about the independence of the benchmarking process.”
A year after Bond’s feigned outrage, it is worth examining progress in rationalizing excessive ferry salaries. Perhaps the action was hard but Liberals know about hard choices. PABsters told us regularly about the need for hard choices when Liberals cut off services to disabled, hiked long term care rates for the elderly to the highest in Canada, diverted lottery funding from community groups, privatized thousands of civil service jobs and matched Canada’s lowest minimum wage to the country’s highest cost of living. Yes, Liberals make the hard choices when it comes to hospital cleaners and utility or medical service plan administrators. Apparently though, not for the chosen ones earning wages 50 times higher.
Sean Holman at Public Eye writes Ship for BC Ferries executives has come in, showing that despite last year’s huffing and puffing, the boys at BC Ferries are even richer. Rather than being slashed or frozen, executive salaries are up again. For CEO David Hahn, nearly 10% more, bringing his annual remuneration to almost $1.2 million.
The BC Ferries situation was not hard to resolve. After all, when the ferry folks feathered their own nests using a flawed compensation process, they completely ignored the executive pay history at the ferry service. They didn’t follow past practices, they established new ones. Clearly, they were cheating. It was a program of self-improvement – at our expense.
That Liberals allowed this is no surprise to observers of the Campbell government over the last decade. Their programs are changing the social landscape through regressive income redistribution. This is not an unintended consequence. Since 2001, while BC Liberal policy has aimed to suppress wages of common workers, the rewards to elites have grown dramatically.
Executive compensation at BC Ferries is wildly out of line.
I’ve written before about how the CEO of Washington State Ferries was paid $141,000 in 2008 but I accept that while that is a valid comparison, it is not excellent. WSF is smaller, with less challenging service needs and it has not been perceived as a well managed corporation for some years. Regardless, it sets a base standard.
Tom Kelly, Executive Director with Irish Continental Group, is responsible for Irish Ferries and earns total compensation of $359,000 CAN (269 EUR). ICG is involved in other shipping and logistical operations, unlike BC Ferries. As part of its fleet, Irish Ferries operates a ship with the largest car carrying capacity of any ferry in the world.
At the other end of the comparison scale would be Stena AB, a Swedish company involved in shipping, ferry lines, property management and numerous other enterprises. Stena is much larger, with over $13 billion in assets while BCF has less than $2 billion. Stena’s annual revenues exceed $4 billion and the local ferry company generates less than one fifth of that amount.
So which company pays higher salaries to its executives? The large private company with international operations or the public monopoly that does most of its business within hollering distance of head office? You probably guessed already. Remuneration paid to BC Ferry’s President and Vice Presidents totals over $3 million in 2009. According to documents filed with the American SEC, remuneration paid to the Stena CEO and Executive Vice President totaled $1.56 million in 2009.
To repeat, David Hahn is paid almost eight times the salary of the WSF CEO and is paid more than the CEO of Stena AB, an international corporation far larger than BC Ferries. By any measure, BC Ferries is paying far too much executive compensation, particularly since operations of the company are no better managed than in earlier years. The Spirit Class ferries built in the early nineties remain the largest and most efficient ships in the fleet and outperform the Coastal Class ferries acquired more recently by Mr. Hahn and his helpers.
One minor point to add is that BC Ferry executives, as part of their compensation packages, which include luxury cars, private healthcare accounts and pensions well beyond ordinary, also get ferry system passes for themselves and their families. They are shielded from paying the outrageous fares imposed on the rest of us.