Fourteen Amtrak executives received more than $200,000 in incentive bonuses last year, even though the service has performed poorly financially recently and struggled with its capital improvement projects, according to documents obtained by The New York Times.
In 2023, Amtrak paid out more than $5 million in short- and long-term incentive bonuses to its executives even as passenger rail reported $1.7 billion in losses, according to filings from Sen. Ted Cruz’s office. Particularly problematic for Amtrak have been efforts to improve service on the Acela, a popular high-speed express route between Boston and Washington, DC
“From delays on the new Acelas to billions of dollars in annual deficits, Amtrak’s performance has been seriously lacking,” Mr. Cruz said. “It is inexplicable that more than a dozen Amtrak executives received six-figure bonuses from taxpayer dollars.”
Amtrak says executive bonuses are necessary to attract and retain talent and rail expertise.
Its 2021 incentive bonus program came under intense scrutiny after The Times reported that the company paid about $2.3 million in bonuses as the rail industry reported its lowest revenue and largest losses in more than a decade. On Wednesday, the House Transportation and Infrastructure Committee held a hearing to discuss two bills aimed at increasing transparency and accountability surrounding Amtrak’s bonus payouts.
Amtrak did not pay bonuses in 2020 due to pandemic-related disruptions to the nation’s passenger rail service and much of the travel industry. Since then, Amtrak has paid about $12 million in incentive bonuses.
Amtrak CEO Stephen Gardner was among three executives who received no long-term incentive bonus last year but received the largest short-term bonus payout, about $320,000. Mr. Gardner testified before a House panel in 2023 that his annual salary was just under $500,000 a year.
Roger Harris, president of Amtrak, received the highest payout for long-term goals, about $305,000. In addition, Mr. Harris received an additional approximately $232,000 from a short-term bonus that was paid, bringing his total incentive bonus compensation for 2023 to over half a million dollars.
Eleanor Acheson, the service’s general counsel and corporate secretary, and Tracie Winbigler, chief financial officer, also received about half a million dollars in incentive bonuses last year.
Amtrak has defended its payouts in recent years, saying the bonuses help make their jobs more competitive and desirable. Last year, the CEOs of profitable freight railways received bonus and incentive payments worth millions.
“For Amtrak to be successful, we must attract a highly skilled workforce across the U.S. and compete with the private sector freight railroads, consulting firms, airlines and others looking to fill the U.S.’s skilled workforce shortage,” Christina Leeds, a said Amtrak spokeswoman in a statement this week.
Passenger rail transportation reduced its reported losses from about $2 billion in 2021 to about $1.7 billion in 2023. Rail continues to miss out on potential revenue, in part because of difficulties in phasing out the older Acela trains on its Northeast Corridor and getting replacements into service. The new Acela trains are intended to run at higher speeds and increase the number of customers Amtrak can carry from Washington to Boston, but the project is three years behind schedule.
Amtrak said executive bonuses are based on ridership, customer satisfaction and financial performance. A letter sent to Amtrak on Tuesday by Mr. Cruz, a Republican from Texas, and Senator Deb Fischer, a Republican from Nebraska, argued that bonuses were not justified because the service was failing to meet its customer satisfaction goals and was incurring billions of dollars in losses.
“Executives of all other companies suffering an annual loss of more than $1 billion would be fired,” the letter said. “But Amtrak rewards them. These bonuses are particularly galling because they come at taxpayer expense without Amtrak providing any satisfactory performance.”
As the railroad continues to move forward with improvement projects, including new Acela trains and replacing aging regional trains, officials there must try to expand their workforce and expertise after years of setbacks.
In 2021, the Biden administration made the largest investment in passenger rail since Amtrak began operating in 1971 as part of the $1 trillion infrastructure bill. Congress appropriated $66 billion for the rail sector, a third including specifically for Amtrak.
Amtrak has lost money every year since it began operations. Rail nearly turned a profit in 2019, but the pandemic killed that chance and the company has gained ground since then.
She said she introduced the bonus incentive program in 2013 after making changes to her pension program and closing it to new employees, saving the rail service hundreds of millions of dollars, Ms. Leeds said.
“We used to offer defined pensions and retirement benefits to attract employees who were paid regardless of performance,” she said. “As recommended by Congress, we have moved to performance-based incentives – incentives are cheaper for taxpayers and drive business results.”
In fiscal year 2023, Amtrak met two of its three goals for the short-term bonus program, reducing the number of delays and reducing operating loss by $90 million above its target. Customer satisfaction continues to be a challenge for the service as the milestone was only narrowly missed. No bonuses linked to customer satisfaction were given, Ms Leeds said.
As for the service’s long-term goals set back in 2021, Amtrak met four out of five, but the service again performed worse in customer satisfaction.
In fiscal year 2023, which ended in September, Amtrak customers took nearly 29 million rides with the company, up about 25 percent from the previous year. By comparison, Amtrak reported only about 12 million customer rides in 2021.
Increased ridership and ticket sales led to a $3.4 million increase in operating revenue, which was 20 percent higher than the previous year but still not enough to help the company turn a profit.
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2024-06-12 19:29:07
www.nytimes.com
