Translink’s board of directors recently voted its top executives a pay increase of up to 25%, and the new range for the CEO is now $406,634 to $517,443. The value of benefits they receive is on top of this. Now, half a million dollars is more than the Prime Minister gets paid, so how does Translink justify it?
Translink hired a consulting firm to help them with a months-long review that resulted in a report that (guess what?) recommended the increase. Why? Well, they found that Translink’s exec compensation was lagging behind similar organizations in Canada, like the Toronto Transit Commission (which is a little like the Soviets comparing one collectivized farm to another collectivized farm, while ignoring the productivity of independent farmers).
The report underlined the need for Translink to attract and retain top talent. There’s probably some truth in that, but so we should be critical of that claim. It’s true that for-profit corporations often pay their top executives a lot more than that, but they also face much greater challenges.
For one, for-profit corporations have competitors, often a lot of them! CEO’s of these businesses know that if they lose market share to competitors, it can result on layoffs, bankruptcy, and serious financial loss and reputational damage to the CEO. Translink, however, has no direct competitors; there are no other mass transit systems in metro Vancouver, because they have been outlawed. Even indirect competition (through inter-city private buses, taxis, or ride-sharing companies like Uber) is limited by the Passenger Transportation Board. Honestly, do you need to be a management wizard to keep your company afloat when you have a government-granted monopoly?
For-profit corporations, if they’re publicly traded, also have to please shareholders, which can be tricky when there are competing goals of long term capital investment and quarterly earnings increases. Translink executives have to keep the mayors from getting too upset, but don’t have to face the discipline of equity markets. Ultimately, taxpayers foot the bill for Translink’s capital projects, but the mechanism for taxpayers to decline funding for a project (voting for politicians) is so occasional and imprecise that it doesn’t have much impact on the day-to-day management of public transit.
Then there’s customer satisfaction to be reckoned with. In some ways, Translink is subject to this, but not to the same degree as most private sector businesses. One rude remark by a check-out clerk can lose a supermarket a life-long customer, but that seldom happens with public transit. Those who take the train or bus to work are willing to put up with surly bus drivers because the alternatives are so scarce.
So, Translink executives don’t face real competition, the agonies of raising capital on the market, or the threat of customers abandoning them due to sub-par service. But yet, they expect to be compensated at the same level as companies that do. All the security of a government-granted monopoly with the salary of successful entrepreneur…nice gig if you can get it!
Clayton Welwood, Candidate for North Vancouver-Seymour
For more on how the BC Libertarian Party is fighting to inject real competition into BC’s transportation sector, visit https://libertarian.bc.ca/issue/transport/