Bonus check on track for MTR bosses

MTR Corp Ltd could start a review on the reward system for senior executives to see if bonuses should be linked to the performance of the railway, sources say.

Phoenix Un

Tuesday, March 26, 2019

MTR Corp Ltd could start a review on the reward system for senior executives to see if bonuses should be linked to the performance of the railway, sources say.

It was after two major accidents on the MTR just days apart - the collision of two trains on the Tsuen Wan line near Central Station last Monday and the loosening of overhead cables on the Airport Express and the Tung Chung line that damaged pantographs of two trains near Sunny Bay Station on Sunday.

The government, the largest shareholder in the MTRC, has already shown displeasure with the management of the corporation, with Chief Executive Carrie Lam Cheng Yuet-ngor telling the Legislative Council that she "does not believe an institute will never make mistakes" and the government may offer a helping hand in reforming institutes.

It is understood that the government, reacting to the spate of accidents, finds the current punishment system - which imposes fines depending on the length of the train service delay, with a maximum of HK$25 million - not enough deterrent and would reform the reward and punishment system of the MTRC senior executives.

The government hopes to link the year-end bonuses of the executives with the service quality and the degree of passenger satisfaction.

Under the current setup, factors determining the variable incentives are the company's performances on the financial and non-financial fronts, including the return on fixed assets and rolling three-year operating profits, as well as individual performance.

The government wants to make a huge change in how the variable incentives are calculated by using four factors - the MTRC's profit, service performance, passengers' satisfaction rate and environmental friendliness and sustainability, each accounting for 25 percent of the incentives.

It is understood the government wants to "return to the original business of mass transit" in which more resources are used to maintain and update trains and signal systems.

It is a reaction to the public's view that the MTRC puts too much focus on side businesses such as property development and other commercial undertakings.

According to its 2017 annual report, chairman Frederick Ma Si-hang only received director's emoluments but no variable remuneration related to performance.

People affected would mainly be members of the executive directorate, such as chief executive Lincoln Leong Kwok-kuen, who decided to retire early after the Sha Tin to Central Rail Link Hung Hom Station construction scandal.

Leong received a year-end bonus of HK$4.5 million, in addition to the fixed base pay, allowances and benefits in kind of HK$9.3 million in total.

Managing director Jacob Kam Chak-pui, who will succeed Leong, received HK$2.2 million and a fixed base pay of HK$6.6 million.

The report also showed that local transport only made up 35 percent of the MTRC's revenue, while side businesses such as property development, management and leasing made up more than half of the total revenue.

It is understood that with Ma about to step down, the reform could only be implemented when new chairman Rex Auyeung Pak-kuen assumes office in July.

Michael Luk Chung-hung, vice chairman of the Legislative Council Subcommittee on Matters Relating to Railways, welcomed the move.

"The executives may have been too focused on the development items with huge profits, and had no time for the trains, so the reform can drive them back to the business of local mass transport," Luk said.

"The current punishment system just punishes the MTR but not the executives."

Luk said he hopes a mechanism will also be introduced to assess the chairman's performance in deciding whether to extend his tenure.

phoenix.un@singtaonewscorp.com