The 'scandal' of £300k bonuses and perks given to CalMac ferry execs

The performance payments come despite CalMac receiving some £10.5m in poor performance fines in the six-and-a-half years since CalMac took the franchise - nearly eight times more than in its first nine years in charge of the beleaguered west coast fleet.

They have been described as "payments for failure" by some ferry user group officials who are shocked by the bonuses in the wake of concerns over how CalMac has managed lifeline ferry services with an ageing, underinvested fleet of vessels.

READ MORE: Fears for ferry fiasco vessels as Ferguson Marine 'considers' job cuts

Robbie Drummond, who became chief executive in October, last year after being managing director for four years and service delivery director before that, has taken over £170,000 in bonuses and perks between 2016 when the Clyde and Hebrides ferry contract was awarded and 2022. Some £109,000 was in the form of performance bonuses and £65,000 was through benefits in kind, believed to be mainly the costs of a car.

Mr Drummond's basic salary has risen during his time as managing director from £138,000 in 2018/19 to £143,000 in 2021/22. But his latest remuneration package including bonuses, perks and company pension contributions stands at nearly £200,000 for the year - £35,000 more than the total salary of Scotland's First Minister.

Some £67,000 in performance bonuses have been shared between Mr Drummond and former chief executive Mr Mackison in the last three years alone. In 2020/21 and 2021/22, Mr Mackison got bonuses totalling £11,000 while Mr Drummond got £9,000.

It comes as CalMac's parent company David MacBrayne Group (DMG) has so far received nearly £900m in taxpayer subsidies from the Scottish Government to run the ferry services. The level of handout has soared from £131.939m in 2016/17 to over £163m in 2021/22 including £11.7m in Covid funding.

The group has in the meantime brought in profits totalling over £18m over the period.

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The Scottish Government's public sector pay policy which has maintained a suspension of performance related bonuses since 2016, does not apply to CalMac or parent company DMG.

But it has applied to minister-owned ferry procurers and owners Caledonian Maritime Assets Limited, which is on a long list of public sector bodies that are covered by the pay rules from the Scottish National Investment Bank to Scottish Water.

The issue over bonuses to publicly owned groups and organisations emerged after it was revealed that a bonus bill to management of the nationalised shipyard Ferguson Marine reached £134,218 over two years while two long-delayed lifeline ferries - Glen Sannox and Hull 802 - are still to be delivered with costs expected to quadruple from the original £97m contract.

In April, First Minister Humza Yousaf told the Scottish Parliament that it was "his expectation" that bonuses to Ferguson Marine executives should not be paid for the 2023/24 financial year.

Official details from DMG, about performance bonuses for executive directors are seen by some as "vague" and comprise what they call "financial and operational targets, personal targets for individual directors and related performance scheme awards for various levels of achievement"

It comes as executives of the state-owned ferry operator CalMac and ministers have been warned they have been acting unlawfully in the way that Scotland's ferry services have been cut to deal with ferry shortages.

Concerns have emerged that there has been a failure to conduct island communities' impact assessments or consult over the method used to decide how services are axed due to breakdowns of Scotland's ageing ferry fleet in breach of the Scottish Government's ground-breaking Islands (Scotland) Act made law in 2018. Similar complaints have been made about CalMac's first-come-first-served policy.

Angus Campbell, chairman of CalMac's independent community board, established as part of CalMac's franchise bid, confirmed there has been no discussion with them over CalMac's route prioritisation matrix in advance of being brought in last year. The algorithm attempts to place ferries in positions to ensure the least impact on the public.

Further concerns surfaces as Mr Drummond attended a heated public meeting on South Uist which has consistently suffered cuts to services as the ferry operator shifts its fleet around to deal with the loss of two ferries - one of which has been out of action for most of the last six months and the other confined to a delayed annual overhaul.

Mr Drummond has faced a second week of visits after CalMac decided to cancel ferries between the mainland port of Mallaig and Lochboisdale on South Uist for the whole of June with local businesses estimating a loss of £50,000 per day due to tourism, imports and exports being hit by the cut.

READ MORE: Auditor concerns over shake-up of bonus culture at Ferguson Marine

South Uist has been consistently hit by cancellations to services through the CalMac route prioritisation matrix which attempts to restrict disruption to the fewest islanders. Last year residents complained that food rations in local shops were the result of freight delivery failures brought about by a ferry breakdown, something denied by the ferry operator.

The Lochboisdale protest.

An estimated 500 residents, 200 cars, 40 vans and 20 lorries converged on Lochboisdale - the port which links South Uist to the mainland - on June 4 to protest about the cancellations.

John Daniel Peteranna of the Lochboisdale Ferry Business Impact Group, which organised the South Uist demonstration was among those who were disgusted by the bonuses.

He said: "Robbie Drummond is getting rewarded and paid more than the First Minister to fail.

"I am astonished that the heads of a failing ferry service provider is getting bonuses for performance. It is another example how the tail is wagging the dog. CalMac is in charge and ministers have no control over them."

Sam Bourne, chairman of the Arran Ferry Action Group said he would be "very surprised" if CalMac executives got bonuses believing that they would fall under the Scottish Government public pay policy.

"They aren't performing," he said. "If they are getting performance bonuses you have to question that. Looking at the general chaos that islanders have had to endure. The booking system being brought in in mid-summer, isn't working properly, there is been a host of ferry service rescheduling and reduced sailings. You have to question as to how these perfomances bonuses are judged.

"CalMac have been dealt a terrible hand and they are having to front up in South Uist to explain it. "But they are not vocal on the issues. There is a contract extension and renewal [from the Scottish Government] due next year and perhaps they don't want to bite the hand that feeds them.

"CalMac have made strategic and operational errors and certain islands get hit repeatedly with South Uist the classic example."

Another ferry user group official said: "It is scandalous that these bonuses have been given to CalMac and Ferguson Marine executives are they are nothing more than a reward for failure and are against a backdrop of almost weekly issues with our ferry fleet.  It really is beyond the pale."

The public sector bonus culture comes despite an outcry over the over £2000-a-day remuneration, made up of fees and expenses given to Ferguson Marine's previous Scottish Government-appointed turnaround director Tim Hair who left his post in February, last year.

he Scottish Government defended the payments to Mr Hair as being "in the middle of the industry norm".

The yard, which was rescued from administration by the Scottish Government in 2019, has struggled to complete two lifeline ferries, with further delays also announced by the yard in March pushing the delivery date for the Glen Sannox and Hull 802 to the end of this year and 2024, respectively, five and six years later than originally planned.

CalMac, one of the best-known names in Scotland for tourists and travellers, beat a rival bid from Serco in May, 2016, to win the contract to service the west coast islands.

At the time the ferry operator with its distinctive red, yellow and black livery featuring the lion rampant was carrying 4.6 million passengers and 1m cars a year to some of Scotland’s most famous islands, such as Lewis, Arran, Mull, Iona, Islay and Harris.

It faced fierce competition for the eight-year contract from the controversial services company Serco, which controls the Northlink ferry service to Orkney and Shetland as well as, until recently, the Caledonian rail sleeper service to London.

CalMac won the contract after pledging no compulsory redundancies, to modernise ticketing on many routes, increase traffic by 10%, improve its apprenticeships and community engagement schemes and invest £6m in service improvements, as well as onboard catering.

CalMac initially denied that any bonuses were paid out in 2021 and 2022. 

After it was pointed out that the bonuses were stated in parent company financial statements seen by the Herald on Sunday, a ferry operator spokesman said after seeking clarification that "bonuses are paid in the year following the year in which they relate".

Robbie Drummond, chief executive of CalMac, said: “Bonuses are a contractual part of a renumeration package offered to directors and have been in place since DML’s creation in 2006.

“We compete in the private sector to attract staff, and recruit staff from some of the best maritime, vessel management and transport companies in the UK, and to do this CalMac must pay and reward its team competitively.

“Parent company DML’s remuneration committee sets bonus targets, which combine corporate and personal targets. In 2021 and 2022 DML did not pay out bonuses in recognition that we received COVID support but paid a flat rate of 1.5% to all staff.

“We remain committed to engaging with island communities and doing everything in our power to deliver the services communities deserve.”