CN Rail President and CEO Claude Mongeau attends the company's annual general meeting in Vancouver, B.C., on Wednesday April 23, 2014. In determining Mr. Mongeau’s bonus, the company’s board found CN’s financial performance exceeded targets, but his individual performance fell short due to the poor safety record.Darryl Dyck/The Canadian Press
Canadian National Railway Co. head Claude Mongeau saw his bonus capped in 2014 because of a "deterioration" in the company's safety record.
Mr. Mongeau, chief executive officer of Montreal-based CN, was paid a total of $9.3-million last year, a 14-per-cent increase, but saw a portion of his eligible bonus reduced because of what the board of directors said was a rise in derailments and employee injuries.
The company, which has had two recent fiery oil train derailments, said in a report to shareholders that in 2015 safety objectives will play an even greater role in measuring the performance and bonus of the company's top executive.
A Reuters analysis of CN's safety record in 2014 found 57 mainline derailments in Canada, a 73-per-cent increase from 2013. The company's management information circular to shareholders released this week said employee injuries due to "slips, trips and falls" rose largely due to the harsh winter in the first quarter of 2014.
Since February, CN has had three oil train derailments in Northern Ontario, including two near the town of Gogama that resulted in fires and oil spills. Under questioning from federal politicians on Tuesday, the company said it has reduced train speeds in the area and increased track inspections.
CN ties bonuses to corporate financial performance (weighted at 70 per cent) and individual performance (30 per cent), which includes "employee engagement" and "opening new markets." For 2015, "safety and sustainability" will be one of five factors against which the CEO's individual performance will be measured, a company spokesman said in an e-mail.
In determining Mr. Mongeau's bonus, the company's board found CN's financial performance exceeded targets, but his individual performance fell short due to the poor safety record.
Mr. Mongeau's total compensation includes salary of $1.2-million, a bonus of $2.5-million and stock awards worth $3.3-million. In addition, he holds stock options worth $65.6-million and shares worth $49.7-million. It is not clear how much bonus he lost due to the safety record.
Still, his 2014 bonus was 56 per cent greater than 2013's, and 14 per cent more than 2012's.
In 2014, CN posted a 14-per-cent rise in revenue and a record profit as train speeds increased, labour productivity improved and freight volumes climbed. The share price rose by 33 per cent. CN's operating ratio, a measure of expenses versus costs, is an industry-leading 61.9 per cent.
Eric Atkins