28 February 2006
KCRC Top Management's Variable Pay
The Kowloon-Canton Railway Corporation (KCRC) would like to make the following clarification in the light of some of the news reports yesterday on the variable pay (VP) of the Corporation’s top management.
The KCRC top management's VP is different from what is commonly known as "bonus". According to the VP scheme, a certain percentage of the annual income of the eight members of the Corporation's Management Committee is withheld as contribution to the central VP pool. The Managing Board will assess the performance of the Corporation and that of the individual member of the Management Committee during the past year to determine the amount of the VP to be allocated.
The aim of the VP is to encourage the Management to focus on four operation areas including financial performance, operational performance, customer services and new capital projects. They are required to achieve standards in these four key strategic areas.
There are 15 criteria for assessing performances with high-targets set on the basis of the pilot scheme developed in 2004. If performances meet target, the top team will be allocated 100% of the VP pool. If performances fail below the targets, the portion being allocated will be reduced accordingly and may even fall to zero. If performances exceed targets, the Corporation will assign additional allocation in accordance with results of the scorecard.
After thorough discussion, the Corporation's Managing Board yesterday (27 February) accepted the assessments and recommendations of the Strategic Human Resource Committee to release the VP to the members of the Management Committee.
The Managing Board was of the view that the East Rail underframe equipment cracks incident should be delinked from the VP. The Government has already indicated that an enquiry panel would be set up to investigate the incident. If it is found that anyone of the Management Committee be held responsible, the Managing Board will take appropriate actions. The Managing Board agreed that the incident and the VP for the year 2005 should be delinked.