Tiny B.C. Rail offers big bucks to bosses
July 22, 2008
Source: Les Leyne, Times Colonist
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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
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
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
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
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