Bonuses In A Dangerous Time

Executive compensation (always a contentious issue) without a solid safety record - what's that all about??

This month a mutual fund publicly questioned the bonus of $3.85 million awarded to Hunter Harrison, the CEO of CNR, amid concerns over the poor safety peformance of the corporation.

Hunter Harrison

Ethical Funds Inc. wanted CNR's Board of Directors to review the link between executive pay and safety performance.

CNR had experienced declining safety performance record illustrated by derailments in Mississippi, which killed four employees, and in British Columbia, Canada (a sodium hydroxide spill into the Cheakamus River).

CNR tried to soften the questioning by stating that "safety is a core value" and that 20 percent of its revenue will be spent on upgrading rail safety.

Both the New York Stock Exchange and the London Stock Exchange have strongly recommended that all new Board of Director members receive orientation about the company's risk management issues.

I applaud that move! It's imperative that each and every Board of Directors play a more active role in reporting the links between health and safety and employee turnover and process inefficiencies.

What do Coca-Cola Company, McDonald's, DuPont and ChevronTexaco have in common?

Well, aside from great branding of their products, these companies all have standing committees that review safety standards and practices. Do they have perfect health and safety records? No. But they're on the right path in recognizing the role of health and safety as an influencer of corporate investment and bonuses.

Safety takes on the high profile enjoyed by "green" corporate governance

Just like investors and consumers have put pressure on corporations to take care of the environment over the last decade, the same is beginning to happen now around health and safety.

All that hard-sought work to internationally brand products could be wasted if presidents and CEOs don't get advice from educated Board of Directors and employees working on the front lines of health and safety. Corporate reputations could be tarnished for decades if there is no vision for safety investment.

And that's the way it should be.

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