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TransLink executive bonuses set off storm of criticism

The pay and bonus package for someone like former BC Ferries’ CEO David Hahn, above, was appropriate, says Roger Gurr, whose consulting company specializes in executive compensation.

Diana Nethercott for The Globe and Mail/diana nethercott The Globe and Mail

The idea was to make government more like business.

"So bonuses were introduced in the public sector the last decade or so, in the core government, but more so in the quasi-government agencies," explained David Good, a former assistant deputy minister in Ottawa who now teaches at the University of Victoria's public-administration school.

But those bonuses, still an important part of what executives of private companies negotiate for themselves, were often an awkward fit in government. "That's because governments don't deal with customers, they deal with citizens who have rights," Prof. Good said, noting they can end up rewarding government executives for speed or cost-cutting over quality of service.

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As well, as everyone has seen this week, those citizens are also quickly outraged at the thought that someone whose salary is paid for by their taxes is entitled to any kind of extra on top of that.

The leaked information that nine TransLink executives were possibly going to split a relatively modest $300,000 or so in bonuses set off a storm of criticism.

Premier Christy Clark instantly came out saying they were inappropriate and that she would have the new municipal auditor-general take a look at them. On the other side of the fence, the bus drivers' union also weighed in negatively, while the Canadian Taxpayers Federation representative Jordan Bateman said that government pensions are already a bonus.

Many Metro Vancouver mayors, who said the bonuses were a surprise to them since it's the appointed board that oversees the operations budget, were equally unsupportive.

But getting rid of bonuses will mean re-examining a philosophy about compensation that has become entrenched in the provincial government.

When Auditor General John Doyle looked at executive compensation at Crown corporations in 2009, he didn't question bonuses as a practice. Instead, his main recommendation was that "performance pay is linked to actual performance." He also didn't provide dollar figures for bonuses paid, either in Crowns or the provincial government.

As a result, the public tends to find out about bonuses only when unhappy insiders leak the information or if people comb through dozens of reports on compensation parked in various places on the Internet.

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Over the past few years, there have been news stories about bonuses at BC Hydro, BC Ferries, Community Living BC and ICBC. But those only skim the surface of bonuses among the province's 24 Crown corporations and main operations.

Those who dig will find out, for example, that Partnerships BC CEO Larry Blain earned $118,250 of "incentive plan compensation" on top of his $348,801.96 salary, plus $55,000 in other benefits in 2010, while three others there split about $86,000 in bonuses. Or that top executives at B.C. Assessment Authority earned bonuses between $4,000 and $10,000 in 2010. Or that an obscure Crown corporation like the Columbia Power Authority gave out bonuses to four executives ranging from $10,600 to $16,000 in 2011.

In the past, politicians have defended them.

TransLink records show it was not the appointed board but local mayors – albeit a different set from today – who approved a new bonus system in 2005 for TransLink executives.

On the provincial front as recently as last fall, Energy Minister Rich Coleman defended Hydro bonuses in the legislature, saying: "These guys have a complicated job."

The tide has clearly turned.

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On Thursday, Ms. Clark was saying that it really "sticks in people's craws, including mine" when government employees get pay rewards on top of everything else. "Now is not the time for people who are employed by the public to be taking big bonuses."

But even those who have questions about bonuses say they may still be needed in some cases.

"If they're well administered and not automatic, they can be good," said Roger Gurr, whose consulting company specializes in executive compensation. Goals need to be clearly spelled out.

He thought the pay and bonus package for someone like former BC Ferries' CEO David Hahn was appropriate.

"BC Ferries needed to attract high-quality people to run the second-largest ferry service in the world and you can't get a deputy deputy minister to do that," Mr. Gurr said.

Even Richard Walton, chair of the TransLink mayors' council and an accountant, said he could see some need – to attract an outside CEO for the agency, for example.

"I'm not completely against bonuses in the quasi-government sector because sometimes you need a complex compensation package," he said. "But it is a minefield for criticism and there's a lot of political risk if the public gets unhappy with your operation and starts to scrutinize everything."

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