Friday, April 8, 2011

Giant paydays proved unsinkable

A government investigation reported in 2009 that BC Ferries' process of setting executive compensation was out of whack. The Comptroller General of British Columbia shocked no one with the report, except for its gentle wording in the face of immodest treasury gouging by operating executives and the Board of Directors.

The boys in the executive suite had assigned themselves remuneration far above comparable positions and the payments were approved by Directors who were themselves taking levels of compensation unprecedented in the ferry corporation's history. The government's chief accountant, Comptoller General Cheryl Wenezenki-Yolland, pointed out that David Hahn, president and CEO, received compensation of $1.035-million in fiscal 2009, more than double the average compensation of the CEOs of larger Crown corporations such as BC Hydro, ICBC, BC Lottery, and WorkSafe BC. Hahn's close lieutenants were also rewarded well above comparable second-tier government executives.

In her report, Wenezenki-Yolland recommended public-sector guidelines for employee compensation at BC Ferries. Hahn rejected that reasoning. “I'm not a public-sector employee, and I wasn't hired to be one,” he said.

Apparently, the proven leadership and prudent management BC Liberals promised as part of their 'Keep BC Strong' platform had failed to function. They hadn't noticed their friends in the boardroom making generous financial arrangements for themselves. Six months later, a year ago now, Transportation Minister Shirley Bond decided to take quick and definitive action.  She said, "Million-dollar paydays at BC Ferries are sinking fast."

Slashing of BC Ferries top salaries enabled senior executive compensation to rise by six to nine percent. David Hahn's total compensation rose by $93,500 in 2010. I've made comparisons to other ferry operators in the world and that review leaves the conclusion that David Hahn must be a very strong negotiator, at least when he deals with his Board of Directors over issues of compensation.

I thought it made sense to compare BC Ferries to BC Hydro, another iconic monument from the days of W.A.C. Bennett. The power utility is larger, by any measure. With more employees, BC Hydro has more than five times the annual revenue and ten times the assets of the ferry corporation. It annually contributes hundreds of millions to the provincial treasury while BC Ferries takes $100 million a year in subsidy.


And, here is the comparable executive compensation:


This, of course, is not the first time Northern Insights has taken a look at BC Ferries. In Carry on Cruising, Carry on Regardless, my look at the ferry corporation's record put me in mind of two titles from the old Britcom series that often starred comic geniuses (genii?) Sid James and Kenneth Williams. Trouble is, watching their craziness cost less than a dollar.

In that piece I repeated a suggestion that may explain the unusual treatment of this particular corporation's executives. It was made to me by someone in the system who should know:
"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."
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1 comment:

  1. The worst part is, we really have no idea, how much money has been thieved from the province and the people, under Campbell's government.

    WCampbell's theft and sale of the BCR, how much was stolen from all of the valuable real estate, that went with the BCR? Where did that money go? Where did the money go, from Campbell's theft and sale of our rivers?

    When will we get back our HST money, that was stolen from us? What about the lie, the HST would create jobs? We are still bleeding jobs. Where is our money we were to save, by the merits of the HST? The cost of living, has gone through the roof.

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