September 4, 2014

Comments: Executive Pay at TransLink

Two Comments to this post – Comedy and Tragedy at TransLink –  that you might otherwise miss … and shouldn’t.

Tim Yzerman forwards this piece from Nathan Pachal (who, plug, is running for councillor in the City of Langley):

By attacking top-level compensation, it is implied that vast sums of money are going to pay for executives and board members, while other service suffers. Is this really the case?

TransLink 2013 Total Expenses

Click to enlarge.

TransLink’s 2013 executive and board member compensation was $3.1 million. TransLink is a $1.4 billion organization. $3.1 million represents 0.2% of its total operation expenses. 

To put that into context, $3.1 million dollar is about how much it costs to run the 320 bus route for one year.

 

From yvrlutyens:

Some thoughts on executive pay.

 The word “compensation” is a euphemism which suggests that all involved are a bit embarrassed and that someone is being paid too much. Notice that everyone making under $50k a year is “paid” and everyone making over $200k a year is “compensated”. 

Corporations do not run as Joel Bakan would have you believe in “The Corporation”. They might be monomaniacly tasked with making money, but actually they are more complex. Corporations may be conceived as pure profit machines, but in reality they are organizations filled with people, and people respond to more things besides profit. 

A pure profit machine would eliminate all unnecessary workers, move all production to East Asia, and pay people the bare minimum to get them to stay at their jobs. Stereotypes aside, corporations can be pretty half-hearted about this. 

As anyone who has worked in any type of organization knows, waste abounds. There are people that don’t pull their weight, are too dense for the job or are overpaid. Bosses don’t deal with this because they want to avoid awkward situations (and because they are lazy, dense and overpaid too). 

This dynamic plays out on boards. Everyone on the board knows each other personally and may be friends. While it may be in the organizations best interest to chop $100k off the CEO’s pay, no one on the board wants to tell it to the CEO’s face: “You’re not worth this” or “you’re too stupid for this job.” 

I’m not for the elimination of all “waste” because, warts and all, human organizations are nicer that pure profit machines and partly because that “waste” spreads some of the wealth around. But a useful metric to determine whether people are overpaid is to look at how much attrition there is. 

If people gush out of the place from every orifice, it’s a sign that they aren’t paid enough. If they never leave, then a sign that they are paid too much. So it’s a question that boards and all employers ought to be asking themselves: would these people still work here if they were paid less? And if the answer is yes, then pay ought to be trending down, not up. 

Board of Translink: If you want to halve your CEO expense, I’ll do the job. I’m serious.

Posted in

Support

If you love this region and have a view to its future please subscribe, donate, or become a Patron.

Share on

Comments

  1. http://howweroll.trimet.org/2013/05/15/theres-more-to-the-wages-story/
    I thought the post above was interesting for a couple reasons:
    1. The GM in Portland decided to put together a response to public criticism regarding management salaries. Whether you believe the justifications or not, at least there was an effort to come across as transparent and understanding of the public frustration, rather than remaining mum. By continuing to simply ignore the criticism from the likes of Bateman and Co., Translink is risking further reinforcing it’s image among some as an out-of-touch, elitist organization.
    2. There was actually some data provided showing the salaries of comparable agency GM’s and how TriMet performs vs peer agencies. It actually gives the public a chance to form a competing perspective on the issue by providing information. Who exactly is Ian being compared to if his salary is $100k higher than the heads of TTC, STM and quite a bit higher than most large US agencies? And how has the agency performed in the last year as compared to peers? How can the public be expected to form any sort balanced view when the only information they’re provided is from an anti-tax advocacy organization? At least give the public some sense that you’re in the “salary neighbourhood”, or if you’re not, how the higher salary is the result of stronger personal performance and has resulted in better outcomes for the region. If much of that increase is in the form of a bonus that is supposed to be tied to performance (which it was this year, for Ian), there should be clear performance measures and examples of attainment justifying the bonus payment. What was Ian even evaluated on?
    Unfortunately, the majority of the increase in pay this year for Ian is due to the structure of the ridiculous long-term bonus plan, which is supposedly paying now for strong performance that occurred in 2010-2012 (details please?). If the financial filings are accurate, Jarvis is owed two more years of this long-term bonus and will pick up another $40k+ at the end of this year, even with the SkyTrain breakdowns and Compass Card delays. There is virtually no way that Jarvis will be paid less than $400k/year for each of the next two years.
    I appreciate that the sum total of all executive salaries is a pittance towards the annual budget, but that’s not the point. Executive salaries in public agencies is about optics. The public wants to feel that they’re getting a fair deal for their dollar, particularly when they’re being asked to pay more (or are about to be asked to pay more). The more the compensation seems excessive, or lacks transparent justification, the easier it is for the likes of Bateman and Co. to take advantage of the poor optics.
    I think the question at hand is whether the poor optics around executive pay will hurt the chances of the referendum succeeding? If there is a chance that it might, will the Board or Mayors be willing to cut, say, $1m in executive compensation (or even just do away with the ridiculous executive bonus plans, saving ~$350k) as a pure optics-improving tactic to ensure there is enough support for the referendum to succeed and for billions in regional investment to proceed? Maybe it’s not an issue, or will pass with a few news cycles. We can hope.