The sa国际传媒 Ferries board grudgingly complied Wednesday with Transportation Minister Todd Stone鈥檚 directive on and phased out the high-rolling bonus plan for executives.
The golden age of six-figure bonuses seems to be coming to an end, although there will still be room for generous merit pay.
Stone was prompted to object last summer after the corporation disclosed two executive vice-presidents collected $127,000 and $133,000 in bonuses, almost double the amounts from the previous year.
A new compensation plan, which includes a freeze on executive and manager salaries until 2016, will reconstitute the bonuses as holdbacks, which will be smaller. The bonuses of the past four years will be averaged, and that amount 鈥� lower than last year鈥檚 total 鈥� will be added to the base pay. But the amount will be held back from executives and managers unless they and the company achieve performance targets.
Stone said Wednesday he鈥檚 pleased with the changes. Together with a 10 per cent reduction in the starting salary for new executive hires, it means compensation is on a downward trajectory, he said.
New Democrat Leader Adrian Dix poured scorn on the plan, calling it a 鈥渂ait and switch鈥� ploy. The corporation is still paying bonuses, they鈥檙e just doing it in a different way, he said.
The different structure will result in some cost savings.
Although executive bonuses got most of the attention, hundreds of managers were also getting bonuses. Next April, they will be discontinued. Their salaries will be increased based on the four-year average of previous bonuses. That figure will be lower than last year鈥檚, because targets were not fully met in previous years.
The new structure would amount to a $30,000 cut next year for the two vice-presidents, according to the company.
Ferries CEO Mike Corrigan鈥檚 half-million-dollar pay was cut earlier by about 40 per cent from the level of his predecessor, David Hahn.
The change to holdbacks at the manager and executive level is expected to save $900,000.
Board chairman Donald Hayes said in a statement: 鈥淲hile the board strongly believes that the bonus plan for executives and managers has driven significant results in all areas of the company鈥檚 performance, we have decided, at the request of the minister, to replace the plan with a salary holdback plan tied to achievement of financial and business results, similar to Crown corporations.鈥�
The bonuses were paid out partly because the corporation met financial targets. But the corporation only met the targets because the government increased the annual subsidy. sa国际传媒 Ferries has also axed half the executives, from 17 to nine in the last four years, claiming savings of at least $2 million a year in executive salaries.
The Canadian Taxpayers Federation said the board was not aggressive enough in reining in salaries. It didn鈥檛 address the real problem with bonuses 鈥� too-easily achievable targets, said director Jordan Bateman.
鈥淭he gravy boat sails on.鈥�
Stone鈥檚 demand is the latest in a series of government interventions in the running of sa国际传媒 Ferries, which was reconfigured 10 years ago expressly to minimize political interference. Previous cabinet ministers in the last few years have complained about exorbitant stipends for the board of directors (Hayes makes $100,000 a year as chairman) ordered an audit of executive pay, and intervened to reduce planned fare hikes.
In the first several years as a publicly owned but privately run corporation, the corporation under Hahn had free rein to pay anyone whatever it decided and do whatever it wanted.
That era has been fading over the last couple of years as the corporation鈥檚 financial troubles deepened and has now come to an end.
The board reports to a separate authority and is watched by an independent commissioner. But it鈥檚 clear the cabinet feels free to call the shots as need be.
The government also commissioned a wholesale review of the long-term sustainability of the service last year. That led to a focus on service curtailments to make up a $19-million shortfall. Stone said details will be revealed next week, followed by a new round of hearings.
Those cuts are expected to take effect next April.
