Conrail's Officers Get Quiet Pay Raises
Conrail's Officers Get Quiet Pay Raises
Aug. 12, 1985
WASHINGTON (AP) _ Top officers of Conrail - the government-owned freight railroad whose employees made three years of wage concessions to help keep the line operating - have been quietly awarded salary increases ranging from about 7 percent to about 21 percent.
Under the new salary schedule prepared by the compensation committee of the railroad's board of directors, raises were recommended for at least 15 officers to make their salaries more competitive with private railroad executives.
The recommendation was accepted last month by the board, according to a board member who was willing to speak about the raises only on condition he not be identified.
Most of the raises ranged from $9,000 to $25,000 a year, the schedule said. Many of the officers had earned $115,000 or more - well above the $86,200 paid to a member of the president's cabinet or the $97,900 paid the vice president.
The salary of Robert H. Platt, executive vice president for finance and administration, went from $199,000 to $221,000, an 11.1 percent boost, the schedule showed. And Donald A. Swanson, vice president for labor relations, received a 21 percent boost from $115,000 to $140,000. There was no public announcement.
From April 1981 through June 1984, Conrail's unionized employees agreed to forgo some salary increases to help their employer keep rates down. The result was that their salaries ended up about 12 percent below those of their industry counterparts.
With the ratification by the United Transportation Union of a new contract last week, all of Conrail's 36,000 employees are now due to return to industry-level wages retroactive to July 1, 1984 - the day the concession agreement ended.
No agreement has been reached to compensate the workers for the wages they sacrificed. Conrail's managers say they allowed their own salaries to drop during the three years by a comparable percentage.
The employees' sacrifices will ultimately be recognized, Conrail said, although it won't guarantee that all the lost wages will be repaid. The unions refer to their sacrifices as wage ''deferrals'' but Conrail spokesman Saul Resnick calls them ''contributions.''
''The union people have made contributions and we have agreed to deal with their claims,'' said Resnick. The matter has become linked to the government's attempt to sell the railroad.
The executive raises were approved July 23 by the board of directors, which is composed of Conrail Chairman L. Stanley Crane, President Stuart Reed and 11 other executives with a wide range of business backgrounds. Six of the executives are appointed by the U.S. Railway Association, established by Congress to monitor Conrail, and five by the Department of Transportation.
A compensation committee document lists raises and ''new'' and ''current'' salaries for 15 top officers.
The listed increases, ranging from 7 percent to 21.7 percent, average 14.2 percent. Some were to take effect in July, others as late as Nov. 1, the document said.
''I don't want to comment but you hope a director does what's best for the company regardless of the political swirl,'' said director John E. Robson, chief operating officer of G. D. Searle & Co., the drug company.
Fred Hardin, president of the United Transportation Union, which represents about a quarter of Conrail's workers, said he had not seen the figures.
''We would be violently opposed if it's over 12 percent,'' Hardin said.
''Now that all employees have been restored, there would be nothing wrong with the officers getting 12 percent since the deferral was supposed to have been shared. If the board voted them more than 12 percent, it's unfair to labor,'' Hardin said.
C.E. Wheeler, general president of the Brotherhood of Railway Carmen, representing some 300 Conrail workers, said, ''We would look very skeptically at them getting a significant raise at a time when employees still have not recovered the wage deferrals.''
A copy of the compensation committee's plan was made available to The Associated Press. It did not disclose what size raises, if any went to Crane and Reed, the top two executives.
Spokesman Resnick refused to reveal the salaries paid to Crane and Reed or discuss whether they got raises. He said the board ''took action with regard to their salaries,'' but would not be more specific.
The increases were ''based on the company's performance and the officers' contributions to that performance,'' Resnick said. ''These senior officials are still well behind salaries given to officers of other major railroads and of the industry in general,'' he said.
Robert Claytor, the chairman of Conrail competitor Norfolk Southern, made $525,000 in cash in 1984 plus $196,875 in incentive plan and bonus awards, according to a proxy statement filed with the Securities and Exchange Commission. The next four officers salaries were $470,000, $275,000, $275,000 and $260,000, the Norfolk Southern statement said.
At CSX Corp., which controls the Chessie System and the Seaboard System, chairman Hays Watkins made $973,445, including bonus payments and stock options, the latest proxy statement said. The next executives on the CSX list made $759,066, $583,564, $572,489 and $450,769. ''But you have to realize we are a holding company and have other interests,'' a CSX spokesman said.
Resnick said he did not believe that the salaries of Conrail's top officials were in the public domain. Railroad officials salaries used to be filed with the Interstate Commerce Commission, but ''they changed the regulations and most aren't here,'' said ICC spokesman Al Brown.
Ole Berge, President of the Brotherhood of Maintenance of Way Employees, said, ''It does seem a little bit strange'' that a record of the raises did not appear to be publicly available.
Resnick questioned the motive of the person who made the figures available to the press.
''I don't know what the motives are, but we would hope that they are not to subject Conrail senior managers to raids from other corporations that on a normal basis pay much more in basic salaries than Conrail officials are getting,'' Resnick said.
Crane told a House subcommittee on July 31 that he was concerned that managers could leave Conrail because of uncertainty about the railroad's future course and relatively low salaries. He said James Hagen, a senior vice president, had left to join CSX.
Congress has been holding hearings to decide whether to sell the government's 85 percent interest in Conrail to either Norfolk Southern Corp. or to a group of investors headed by Morgan Stanley & Co. of New York. The investors say they would eventually resell a majority of interest in the railroad in a public stock offering.
Conrail was created in 1976 from the shells of the bankrupt Penn Central and five other rail lines. It suffered heavy losses in its early year, before cost cutting, employee concessions and modernizing its rail network and equipment helpoed propel it to profitability. The railroad reported a profit of $210 million during the first half of this year.