Replies to LegCo questions

LCQ7: HA's granting of performance incentive award

     Following is a question by the Dr Hon Lo Wing-lok and a written reply by the Secretary for Health, Welfare and Food, Dr Yeoh Eng-kiong, in the Legislative Council today (February 25):

 

Question:

 

     Regarding the Hospital Authority's (HA) granting of performance incentive award (PIA) to its Chief Executive, Cluster Chief Executives and Hospital Chief Executives, will the Government inform this Council whether:

 

(a) it knows, in regard to each of the past five years, the total amount of PIA granted by HA and, in respect of each of the above post-holders, the annual PIA received, expressed as a percentage in relation to the sum of the annual basic salary and cash allowance of each post-holder, and how the percentage compares to the percentage ceiling stipulated in the relevant employment contract; and

 

(b) the Government will request HA to delete the grant of PIA from the terms of the new contracts for the above posts; if not, the reasons for that?

 

Reply:

 

Madam President,

 

(a) In the design and determination of the total remuneration package of the Chief Executive of the Hospital Authority (CE/HA), Cluster Chief Executives (CCEs) and Hospital Chief Executives (HCEs), an annual performance incentive award (PIA) was incorporated.  The PIA is intended to provide a management tool for continuous improvements in hospital services.  It is an amount excised from the total remuneration package of CE/HA, CCEs and HCEs, and the granting of the PIA in each year is subject to an annual performance assessment.  The total amounts of PIA made by the Hospital Authority to the CE/HA, CCEs and HCEs in each of the past five years are as follows -

 

Year                   Total Amount of PIA ($ million)

1998/1999              15.1

1999/2000              15.4

2000/2001              13.3

2001/2002              13.7

2002/2003              12.6

 

     The ceiling of PIA stipulated in CE/HA's contract was 30 per cent of basic salary and cash allowance and that in CCEs' and HCEs' contract 15%.  In view of the tight financial situation faced by the HA, the CE/HA, CCEs and HCEs voluntarily reduced those ceilings on a permanent basis to 24 per cent and 10% respectively in late 2002.  On top of the lowering of the award ceilings, CE/HA, CCEs and HCEs consented to two reductions in their basic salary and cash allowance that took effect in October 2002 and January 2004 respectively, which resulted in consequential reductions in the amount of PIA.  Over the past five years, there were a total of 13 occasions where a senior executive did not receive the full amount of the PIA.  The relevant details of those cases are in Annex.

 

(b) The HA is a statutory body vested with the power to employ such persons as it thinks fit to carry out hospital services or any other matter relating to the performance of its functions or the exercise of its powers.  The question of whether the PIA should be retained in the new contracts of its senior executives is a matter within the HA Board's prerogative.  The HA's view is that the PIA is a valuable management tool for encouraging continuous improvements in hospital management and that the PIA has improved the transparency of the assessment process and provided an effective mechanism for monitoring the performance of its senior executives.  The Government has asked the HA to review the merit of retaining the PIA as a component of the remuneration packages for its senior executives.  In this connection, the HA is planning to conduct an overall review of the remuneration packages of its senior executives in the near future.  Changes to the remuneration packages will be made, where necessary, taking into account various factors, including modern human resources management practices and overall consideration of remuneration packages in the organisation.

 

Ends/Wednesday, February 25, 2004

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