Metro-North gave leader big raise as safety deteriorated

Railroad rewarded leader for 'good' performance as railroad safety deteriorated

At the same time that a federal probe found safety at Metro-North was being sacrificed to accommodate on-time performance, the head of the railroad was rewarded with nearly $100,000 in raises.

Former Metro-North president Howard Permut led the railroad from 2008 to December 2013, a time when mounting troubles led him to retire at the end of the year. In addition to two derailments, one of which killed four passengers, the problems include a fatal accident involving a rail worker, a multi-day major power outage and numerous smaller difficulties.

In a scathing report released earlier this month, the Federal Railroad Administration found the railroad's safety culture was severely lacking as a result of efforts to maintain an on-time performance of 97 percent or better on each of the railroad's three main lines.

While Permut did not receive any additional remuneration on top of his $215,000 starting salary between 2008 and 2011, former Metropolitan Transportation Authority Chairman Joseph Lhota awarded him a retroactive raise in the form of a one-time lump-sum raise of $98,000 in late 2012, based on his "good performance."

What defined "good performance" is unclear since Permut's contract did not set any specific goals, and Metro-North declined to provide Hearst Connecticut Media with any criteria that was used to gauge his performance.

The Metropolitan Transportation Authority, which operates Metro-North, does not have an internal compensation committee that might delve more substantively into management raises based on performance, said James Blair, a member of the MTA's board from Westchester County.

"In my view it is a serious deficiency," Blair said. "Compensation committees are common throughout the corporate world and it is important that the board have input on compensation to senior executives, that the board know what the basis on which recommendations are being made."

Connecticut does not have a seat on the MTA board, and state transportation Commissioner Jim Redeker said his agency does not contribute to decisions about performance based raises in vendor contracts.

More Information
In perspective
As rail executive salaries go, Permut and Giulietti's salaries do not exceed the norm of their counterparts at railroads in some similarly large regions that in some cases provide significantly fewer rides or have smaller work forces than Metro-North, which provided 81.8 million rides on the New Haven Line in 2013 and has 6,000 employees. Giulietti's base salary is $285,000 a year. Permut's was $215,000 Donald Orseno, the chief executive of Chicago's Metra commuter rail system earns $262,500 a year; a system which provided 73.2 million trips in 2013 and has 2519 employees.
Confirmed by New Jersey Transit's board in February, Veronique "Ronnie" Hakim will make $261,324 running a railroad which provides 79.2 million rides and has a workforce of 4,500.
General Manager for San Francisco's Bay Area Rapid Transit Grace Crunican made $321,538 in base pay in 2013, overseeing a system that provided 122 million trips and links cities in the East Bay and San Mateo County to San Francisco. The system has 3,252 workers.

The DOT is responsible for the contract Metro-North holds with the state to operate the commuter railroad in Connecticut.

"When it comes to Metro-North, my primary focus is on accountability for restoring the safest, most reliable and efficient service possible," Redeker said in an emailed statement." Having the best employees to lead the organization plays a major role in that service delivery. Decisions about salary and other compensation are not made at CTDOT."

Newly installed Metro-North President Joseph Giulietti's contract also does not have any specific goals or incentives tied to performance in his contract. When hired to succeed Permut in December, Giulietti signed a contract guaranteeing a base salary of $285,000, with possible salary raises to be determined annually based on a review of his job performance by MTA chairman and CEO Thomas Prendergast.

Giulietti has initiated a 100-day plan to put the railroad back on track and emphasize the safety of passengers and employees. However, within weeks of his appointment, a rail worker was struck and killed while restoring power to tracks in the Bronx.

When informed about Permut's raises and the lack of performance benchmarks, area lawmakers who have been vocal about Metro-North's problems, said it raises additional concerns.

"What raises are based on is key," state Sen. Toni Boucher, R-Wilton, ranking minority member of the General Assembly's transportation committee said Thursday in a phone interview.

"Right now after the report has come out it is obvious safety was being jeopardized in favor of on-time performance it makes it important that any incentives be focused on safety," Boucher said.

U.S. Sen. Richard Blumenthal, D-Conn., said railroad executives need to have performance goals and specific criteria that must be met for giving performance-based raises.

"My view is that compensation really has to be very carefully reviewed to create the right incentives, and this railroad is now at a turning point where it will remain at the cusp of more crises or enter a promising new era of leadership," Blumenthal said. "Clearly in the past there were evidently no metrics that would have insisted on adequate inspection or implementation of recommendations like cameras and other sensible steps to achieve reliability and safety."

When Giulietti started at Metro-North last month, he said his first goal will be to make safety the first priority. His first-100-days action plan released in early March includes a reorganization of the railroad's safety department to make it a more proactive entity that attempts to prevent worker accidents.

Giulietti's plan followed the release of the Federal Railroad Administration's "deep dive" report, which found that efforts to achieve on-time performance compromised safety on the railroad. The resulting lapses in training for track inspectors and other key personnel created a "deficient safety culture" that failed to identify foreseeable hazards.