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Re-engineer SMRT from the top to resolve breakdowns

The Transport Minister said in Parliament in January that “rail reliability is an engineering problem (so) let our engineers solve it the engineer’s way.” Maybe this emphasis on engineering should start at the top, with SMRT’s board of directors.

The Transport Minister said in Parliament in January that “rail reliability is an engineering problem (so) let our engineers solve it the engineer’s way.” Maybe this emphasis on engineering should start at the top, with SMRT’s board of directors.

Fewer than half of them have an engineering background, and while diversity on the board is valued, more engineers are clearly needed to have strategic resolutions to the increasing MRT breakdowns.

Secondly, SMRT adopts an Economic Value Added (EVA) analysis in computing part of the chief executive officer’s annual remuneration. This is a common business practice to tie executives’ salaries to performance.

The calculations include the cost of capital, so the prospect of a lower short-term EVA and the resultant bonus may discourage an executive from investing in new projects.

SMRT’s EVA bank is a deferred scheme of three years, which may be too short a time frame given SMRT’s infrastructural nature. Five years or even up to 10 years may be more appropriate.

SMRT’s ex-CEO was paid $725,000 in 2013 and $390,000 in 2014 under her EVA bonus. We have the benefit of hindsight today, and given some of the poor decisions from earlier years, SMRT’s ex-leadership should be held accountable.

A clawback of bonuses paid to management could be used to fund transport schemes for less-privileged Singaporeans.

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