CN, Workers, and Chief Executives


CN, Workers, and Chief Executives



Facts and Figures on Productivity and Compensation

  • After the close of business on October 20, CN announced that it plans to permanently lay-off 3,000 workers over the next two years. This will reduce its total workforce to about 18,000 by the end of 1999–a decline of 50 percent since 1992.
  • As of end-1997, CN’s CEO Paul Tellier owned 113,800 stock options (granted as part of his overall compensation package). At that time, these options were worth $7.7 million.
  • On the first full trading day (October 21, 1998) after the latest lay-offs were announced, CN’s share price rose by $3 (from $72 per share to $75). This represents a gain in the company’s total market value of over 4 percent (or a quarter-billion dollars) in a single day.
  • The value of Paul Tellier’s CN stock options rose by over $340,000 in that same single day–an amount equal to the annual salary of close to seven average CN workers. He said publicly that he "deplored" the lay-offs (even though it was his decision to make them), yet his personal fortune grew substantially as a direct result of his decision.
  • Paul Tellier received salary and bonus totaling $1.3 million during 1997. (This excludes the value of stock options.) This is equivalent to the earnings of over 30 average CN workers. He has received total salary and bonus during the three years since CN was privatized of some $2.8 million.
  • In just the first two years after CN’s privatization, the productivity of CN’s workforce (measured in revenue ton miles per employee) grew by 34 percent. Revenue per employee grew by 30 percent (to over $190,000 per worker). Revenue generated for each dollar of labour expenses grew by 14 percent; CN now takes in over three dollars of revenue for each dollar it spends on labour. Average labour cost per employee (including all fringe benefits and payroll taxes) grew by 14 percent.
  • In those same two years (from 1995 to 1997), Paul Tellier’s salary and bonus (again excluding stock options) grew by 108 percent. CN’s profits (before special charges) grew by just 17 percent. We might measure Paul Tellier’s productivity in terms of dollars of profit generated per dollar of CEO salary and bonus. By this standard, Tellier’s productivity has declined by 44 percent since 1995. Shareholders love him anyway, however, because of the big run-up in share prices that has accompanied his relentless downsizing.
  • Remember: most CN shares are now owned by U.S. investors. So the creation of shareholder wealth that accompanies the lay-offs is largely exported from Canada.


Print Print  Send to a friend Send to a friend  Feedback Feedback