BC Ferries News Release re Commissioner

For Immediate Release
15-011
March 18, 2015
BC FERRIES WELCOMES COMMISSIONER’S EFFICIENCY REPORT FINDINGS
VICTORIA – BC Ferries’ President and CEO, Mike Corrigan said he welcomes the BC Ferries
Commissioner’s Performance Review of the Efficiency of BC Ferries, along with several other
review and assessment reports released today.
“In his efficiency assessment of the company, the Commissioner re-confirmed that
BC Ferries is well-run, that we demonstrate good cost control and that we have a strong culture of
efficiency,” said Mike Corrigan, BC Ferries’ President and CEO.
The efficiency assessment also indicates that: administrative expenses have declined by
15.1 per cent since 2009; executive compensation is at the low end of the four largest provincial
crown corporations that BC Ferries was compared with and is appropriate for an organization of its
size and complexity; the management structure is appropriate; and overtime hours and absenteeism
rates have declined. The assessment of BC Ferries Vacations also indicates that the business case
for the service is sound given the consumer take-up since the inception and the high level of
participation by hotel and destination partners.
“On behalf of the Board, I want to acknowledge the achievements of President and CEO,
Mike Corrigan and the executive management team for exercising strong financial leadership and all
of BC Ferries’ employees for their contribution towards realizing cost savings throughout the
organization,” said Donald Hayes, Chair of the Board of Directors of BC Ferries. “The team has
been navigating through challenging times and with perseverance, has accomplished outstanding
results.”
The Commissioner also released the Preliminary Decision on Price Caps for the Fourth
Performance Term, in which he has set the increase in price caps (or average fare increases) at 1.9
per cent per year from April 1, 2016 through March 31, 2020.
“These price caps establish rate stability and certainty for ferry travellers for the four years
beginning April 2016. In an environment with a $3 billion capital program required, coupled with
significant costs to deliver safe and reliable ferry service, being able to keep fares at or below the rate
of inflation is a major accomplishment,” said Corrigan.
BC Ferries supports the Commissioner’s comments that all the key stakeholders had a role
to play in making the ferry system financially viable for the operator, sustainable for the taxpayer and
affordable for the ferry user. The government amended the legislation to expand the powers for
British Columbia Ferry Services Inc., 500-1321 Blanshard Street, Victoria, BC V8W 0B7
Tel (250) 978-1267 Fax (250) 978-1119 www.bcferries.com/bcfnews/
Note to newsrooms: For urgent media inquiries off-hours, call our emergency pager at (250) 516-7211.
Page 2
oversight by the Commissioners and provided $86 million in new funding over Performance Term
Three. BC Ferries expects to significantly exceed the $54 million efficiency target set by the
Commissioner for Performance Term Three by approximately $30 million, and ferry users are
adapting to revised service levels, which has improved capacity utilization.
The role of the Commissioner is to balance the interests of ferry users, taxpayers and the
financial sustainability of the ferry operator. Customers have been calling for lower fare increases
and these price caps are approximately at the rate of inflation.
Under contract to the Province of British Columbia, BC Ferries is the service provider
responsible for the delivery of safe, efficient and dependable ferry service along Coastal British
Columbia.
- 30 Backgrounder attached
Media Contact:
BC Ferries, Media Relations
Victoria: (250) 978-1267
Customer Contact:
Victoria: (250) 386-3431
Toll-free: 1-888-BCFERRY (1-888-223-3779)
British Columbia Ferry Services Inc., 500-1321 Blanshard Street, Victoria, BC V8W 0B7
Tel (250) 978-1267 Fax (250) 978-1119 www.bcferries.com/bcfnews
March 18, 2015
HIGHLIGHTS OF PERFORMANCE REVIEW OF EFFICIENCY OF BC FERRIES
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BC Ferries is demonstrating good cost control, especially in the area of administrative
expenses. Overall administrative expenses have been reduced as a result of lower
executive compensation and reduced head count.
BC Ferries appears to have a strong culture of efficiency, based on its sound budgeting
process, and alignment of performance pay with corporate objectives.
BC Ferries executive compensation compares favourably against the four largest
provincial Crown corporations.
BC Ferries executive compensation policies and procedures appear appropriate for an
organization of its size and complexity.
BC Ferries complies with the PSEC guidelines for at-risk compensation, organizational
layers and direct reports to the CEO. The number of managers is appropriate.
Administration expenses declined 15.1 per cent from $37.2 million to $31.6 million from
F2009 to F2014.
Current average weekly earnings for bargaining unit and exempt employees combined fall
between the Canadian Transportation and Warehouse Sector and Utilities sector and do
not appear excessive.
Certain employees from the bargaining unit were reclassified to the exempt classification
beginning in F2012. Pre-existing exempt labour costs have declined. Results suggest that
the higher percentage of exempt labour has provided BC Ferries with more flexibility to
manage overall labour costs.
Total overtime hours have decreased by 12.8 per cent from F2009 to F2014.
BC Ferries’ absenteeism rates are below the averages for the Transportation and
Warehousing Sector reported by Statistics Canada.
Executive compensation is lower than that for BC Hydro, BC Lottery Corporation and
the Insurance Company of BC, and on par with WorkSafeBC.
A significant decrease in the BC Ferries compensation figures occurred starting in F2012.
The decrease coincided with the elimination of the EVP & COO position, which was the
second highest paying executive position as well as the elimination of the long-term
incentive bonus plan beginning in F2012.
British Columbia Ferry Services Inc., 500-1321 Blanshard Street, Victoria, BC V8W 0B7
Tel (250) 978-1267 Fax (250) 978-1119 www.bcferries.com/bcfnews/
Note to newsrooms: For urgent media inquiries off-hours, call our emergency line at (250) 516-7211.
Page 2
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Executive compensation at BC Ferries has declined significantly over the period from
$3.0 million in F2009 to $1.8 million in F2014.
Of the 4,234 total employees at BC Ferries, 650 employees, or approximately 15 per cent
are exempt. Of those 650 exempt employees, 179 meet the administrative definition of
management as defined by the Commissioner in so far as they have both budgeting
authority and direct reports.
Defined as the proportion of managers to bargaining unit, the management span of
control ratio at BC Ferries is equal to approximately 20.0:1.
The performance holdbacks or other forms of at risk performance compensation have
been eliminated for the majority of exempt staff.
In the past, approximately 75 per cent of exempt staff qualified for bonuses. Now,
holdbacks apply to 20 management staff whereby a portion of the individual’s salary is
held back and payable only upon the achievement of stretch targets.
The long-term incentive plan was eliminated in F2012. BC Ferries then eliminated the
short-term incentive plan and replaced it with the holdback program. These changes
were retroactive to April 1, 2013 for senior managers, and April 1, 2014 for others
qualifying.
- 30 Media Contact:
BC Ferries, Communications
Victoria: (250) 978-1267
Customer Contact:
Victoria: (250) 386-3431
Toll-free: 1-888-BCFERRY (1-888-223-3779)
British Columbia Ferry Services Inc., 500-1321 Blanshard Street, Victoria, BC V8W 0B7
Tel (250) 978-1267 Fax (250) 978-1119 www.newsroom.bcferries.bc.ca