AMTRAK’S BOARD OF DIRECTORS PROVIDES 

LEADERSHIP TO THE CORPORATION BUT CAN 

IMPROVE HOW IT CARRIES OUT ITS OVERSIGHT 

RESPONSIBILITIES 

National Passenger Rail Corporation (Amtrak) 

Report Number: CR-2007-074 

Date Issued: September 14, 2007 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: Amtrak’s Board of Directors Provides 

Leadership to the Corporation but Can Improve 

How It Carries Out Its Oversight Responsibilities 

National Passenger Rail Corporation (Amtrak) 

Report Number CR-2007-074 

Date: September 14, 2007 

From: David A. Dobbs 

Principal Assistant Inspector General 

 for Auditing and Evaluation 

Reply to 

Attn. of: JA-50 

To: Federal Railroad Administrator 

Amtrak Board of Directors 

On April 25, 2006, the Democratic Members of the House Committee on 

Transportation and Infrastructure Amtrak Working Group requested that our office 

conduct an audit of Amtrak’s Board of Directors (the Board).1

 This request was 

prompted by the Working Group’s review of Amtrak’s performance related to the 

issues raised in a 2005 Government Accountability Office (GAO) report2

concerning Amtrak. The GAO report cited deficiencies in Amtrak’s strategic 

planning, financial reporting, acquisition management, cost containment, and 

accountability and oversight. 

In their request, the Members indicated their belief that some of the deficiencies 

cited in the GAO report represented a failure of Amtrak’s Board. Their chief 

concern was whether the Board had exercised sufficient oversight of the 

corporation and held management accountable for results. In addition, there were 

concerns regarding the appropriateness of the Board’s expenses. 

The objectives of our audit were to determine: (1) the rules, procedures and 

authorities under which the Board operates; (2) whether the Board has followed 

established processes and procedures; (3) whether the Board has set long-term 

 

1

 The current Board was established by the Amtrak Reform and Accountability Act of 1997, Pub. L. no. 105-134 

(1997), which specifies the Board’s structure, the Director’s qualifications, and how Board members are appointed. 

There are up to seven voting Board members, and the Amtrak CEO serves as a non-voting member. Board members 

are nominated by the President and confirmed by the Senate; they serve 5-year terms. 2 Amtrak Management: Systemic Problems Require Actions to Improve Efficiency, Effectiveness, and Accountability. 

October 2005. GAO-06-145. 
2

goals and performance objectives; (4) whether the Board’s processes and 

procedures are sufficient for ensuring oversight of and requiring accountability 

from Amtrak management; and, (5) whether the Board members’ expenses 

comply with corporate guidelines and if those guidelines ensure the prudent use of 

corporate resources. 

We performed the audit in accordance with Generally Accepted Government

Auditing Standards prescribed by the Comptroller General of the United States. 

We reviewed the Board’s actions from January 2002 to July 2007 and Board 

expenses from January 1, 2002, through December 31, 2006. To complete this 

audit, we attended Board meetings and reviewed legislation and policies relevant 

to the management and governance of Amtrak, Board meeting minutes, applicable 

corporate board “best practices,” and Board expenses. We also conducted 

interviews with Amtrak Board members, Amtrak’s President and Chief Operating 

Officer (CEO) and other senior Amtrak officials, and those who worked on the 

2005 GAO report. Exhibit A details our audit scope and methodology. 

RESULTS IN BRIEF 

We found that the Board complies, with limited exceptions, with the rules and 

procedures delineated in its corporate bylaws and Statement of Policy. We also 

found that the Board established a strategic direction for Amtrak in April 2005 but 

did not fully implement it. In June 2007, the Board adopted a revised plan for 

FY 2007 through FY 2008. We also found that the Board has the tools to conduct 

oversight and hold management accountable and provides oversight of 

management’s actions. However, the Board could improve its effectiveness by 

implementing some corporate governance best practices. Finally, we found that 

the Board members’ expenses comply with corporate guidelines and are 

reasonable. 

The Amtrak Board sets and oversees Amtrak’s strategic direction while the 

Amtrak CEO manages day-to-day operations. The general authorities under 

which the Board and CEO operate are enumerated in Amtrak’s bylaws, which 

were established in accordance with the District of Columbia Business 

Corporation Act.3

 These bylaws charge the Board to “manage Amtrak’s affairs 

and business.” The CEO is charged with “general supervision of Amtrak’s affairs 

and, subject to the policies and direction of the Board, supervising and directing 

all of Amtrak’s officers and employees.” These respective responsibilities result 

in the Board setting and overseeing Amtrak’s strategic direction and the CEO 

managing Amtrak’s day-to-day operations. 

 

3

 As a for-profit corporation incorporated in Washington, DC, Amtrak is subject to District of Columbia Business 

Corporation Act. 
3

With few exceptions, the Board followed established processes and 

procedures. We found that, in general, the Board followed its established 

processes and procedures; however, we noted three exceptions. The Board did not 

consistently meet in the committees called for in its Statement of Policy or hold an 

annual election of the Board Chairman and Vice Chairman as required in its 

bylaws. Recently, the Board took action to address these issues. In addition, the 

Board did not receive detailed lists of capital projects over $1 million included in 

its proposed Annual Grant and Legislative request prior to approving that request 

as called for its Statement of Policy. These lists were prepared by and available to 

Amtrak management as part of the capital budget planning process, but were not 

provided to or requested by the Board. Amtrak management indicated that the 

Board would receive this information at its next scheduled meeting. 

The Board set a long-term strategic direction for Amtrak, but this plan 

lacked detail and was not fully implemented. The Board set a strategic 

direction for Amtrak with its April 2005 Amtrak Strategic Reform Initiatives and 

FY 2006 Legislative Grant Request. This document provides high-level strategic 

direction to guide Amtrak management and employees in the performance of their 

duties. 

The April 2005 document contained broad long-term objectives that were not 

translated into a detailed plan with outcomes, milestones, and performance 

measures. According to the Board Chairman, this resulted from resistance to the 

planning process by the previous CEO and the transition to a new CEO and senior 

management team. As a result, the Board and Amtrak management lacked a 

comprehensive standard against which to evaluate how Amtrak’s day-to-day 

activities are addressing the Board’s strategic vision for Amtrak. The revised June 

2007 plan addresses this problem in part by providing measurable, near-term goals 

but provides only limited and non-quantified long-term goals. 

The Board has limited but sufficient tools to conduct oversight and hold 

management accountable. We found that the Board has sufficient tools available 

to conduct oversight and hold management accountable; however, the tools 

available to it are more limited than those available to a typical corporate board. 

The available tools are both formal, such as the requirement that it approve an 

annual legislative and grant request, and informal, such as the ability to challenge 

management’s proposals by asking incisive questions and examining underlying 

assumptions and trade-offs. 

While the Board conducts oversight and holds management accountable, its 

practices could be improved. The Board has shown a willingness to conduct 

oversight and hold management accountable. Nevertheless, we found that the 

Board’s oversight and accountability system could be improved by adopting 
4

corporate best practices regarding the timing and quality of information it receives 

and evaluating its own effectiveness. 

Board members’ expenses comply with corporate guidelines and are 

reasonable. We found that between 2002 and 2006, board members’ 

compensation (i.e., director’s fees) and expense reimbursements complied with 

applicable guidelines. We also found that these guidelines were adequate to 

ensure the prudent use of corporate resources. While these guidelines do not limit 

the amount of travel, subsistence, or other expenses for which a board member 

may be reimbursed, in practice, board members apply a standard of reasonableness 

to their reimbursement requests. In addition, all of the Board’s expenses are 

reviewed for reasonableness by the Amtrak General Counsel’s Office before being 

paid. Issues regarding reimbursement requests are raised to the Amtrak CEO and 

resolved between the CEO and the Board Chairman. This level of review and 

oversight is commensurate with the limited amount of funds involved. 

FINDINGS 

The Amtrak Board Sets and Oversees Amtrak’s Strategic Direction 

While the Amtrak CEO Manages Amtrak’s Day-To-Day Operations 

Amtrak’s bylaws give the Board responsibility for managing Amtrak’s affairs and 

business4

 and the CEO responsibility for general supervision of Amtrak’s affairs 

and, subject to the policies and direction of the Board, supervision and direction of 

Amtrak’s officers and employees. Both Amtrak’s Board Chairman and CEO told 

us that, in practice, these authorities result in the Board setting, and overseeing 

progress towards, a strategic direction for Amtrak and in the CEO managing 

Amtrak’s day-to-day operations. 

The Board has adopted a Statement of Policy that delineates the rules and 

procedures through which it implements the authorities provided to it by the 

corporation’s bylaws. The Statement of Policy requires the Board to approve: 

(1) an annual corporate budget, including a capital budget and a revenue and 

expense operating budget; (2) capital and lease commitments exceeding 

$1 million; (3) changes to capital and lease commitments that exceed specific 

thresholds; (4) major operating budget resets; (5) a corporate strategic business 

plan; (6) certain business transactions that exceed specific thresholds; 

(7) executive level compensation and personnel actions, (8) the initiation or 

termination of train service; and (9) pattern collective bargaining agreements. 

 

4

 This language is taken directly from the District of Columbia Business Corporation Act, D.C. Code Section 29-

101.32(a). 
5

The Statement of Policy also specifies the compensation and expense 

reimbursement policy for the Board’s members, committee structure, and certain 

delegations of authority. Amtrak’s bylaws also stipulate who will chair Board 

meetings in the absence of the Chairman, where to hold meetings, how often to 

hold meetings, what committee procedures will be, and what will constitute a 

quorum. 

With Few Exceptions, the Board Followed Established Processes and 

Procedures 

We found that, in general, the Board followed established rules and procedures. 

However, we noted three exceptions. The Board has taken steps to address these 

exceptions. 

First, we found that the Board did not consistently meet in the committees called 

for in its Statement of Policy. According to the Board Chairman, the number of 

vacant board positions in recent years made it impractical to meet in committees. 

As shown in Table 1, the Board last had a full complement of seven members in 

May 2003. Exhibit B lists the names and dates of service of all Board members 

from 2002 to present. At times, the Board has had only three members, while its 

Statement of Policy called for five committees at the time.5

 As a result, the Board 

as a whole sought to conduct the activities that would otherwise have been 

assigned to committees. In April 2007, the Board restructured and re-established 

its committees, assigned a different member to chair each committee, and began 

holding committee meetings before regularly scheduled Board meetings. At 

present, all five board members serve on each committee. 

 

5

 Until April 2007, the Statement of Policy established the following five committees: Audit, Compensation and 

Personnel, Corporate Affairs, Finance, and Legal Affairs. In April 2007, the Board replaced these committees with 

the following four committees: Audit and Finance, Government Relations and Corporate Affairs, Personnel and 

Compensation, and Risk Management and Legal Affairs. 
6

Table 1. Board Membership 

Date Number of Months Voting Members

January 2002-October 2002 10 6 

November 2002-May 2003 7 7 

June 2003-August 2003 3 5 

September 2003-June 2004 10 3 

July 2004-May 2006 23 4 

June 2006 1 3 

July 2006-August 2006 2 5 

September 2006-November 2006 3 6 

December 2006-July 2007 8 5 

Second, we also found that the Board did not hold an annual election of the Board 

Chairman and Vice Chairman, as its bylaws required, between July 2003 and July 

2007. At its April 2007 meeting, the Board formally voted to re-elect David 

Laney as Board Chairman. Mr. Laney has been serving as Board Chairman since 

being elected to that position on July 23, 2003. The Board formally voted to elect 

Donna McLean and Hunter Biden as co-Vice Chairmen at its July 2007 meeting. 

The Board had elected Sylvia DeLeon as Vice Chairman on July 23, 2003. 

However, Ms. DeLeon left the Board in August 2004. 

Third, we found that in the last 2 years, the Board did not receive detailed lists of, 

or grant approval for, capital projects costing over $1 million included in its 

proposed Annual Grant and Legislative request. The Statement of Policy requires 

that the Board not only approve the overall capital budget, but also the individual 

capital projects over $1 million. According to Amtrak staff, these extensive lists 

were prepared each year and used by Amtrak executives in managing Amtrak’s 

capital program. However, Amtrak did not provide these lists to the Board as it 

had done previously and the Board did not request them. Instead, the Board 

received higher-level summary information on the proposed capital program. 

Amtrak management indicated that the Board would receive the capital projects 

list at its next meeting. 

The Board has been working with Amtrak management to improve the capital 

planning process. We believe that a prioritized list of proposed projects that are 

valued at $1 million or more is an important part of this process in terms of 

management of the capital program. The Board should ensure that this list is 

prepared and used by management. However, we do not believe that it is 

necessary for the Board to review the capital program on a project-by-projectbasis. Instead, the Board should focus on how the program’s priorities are set, 

what the program’s expected outcomes are, what risks are involved in 
7

implementing the program, and the projects that are large-dollar or otherwise 

significant. 

The Board Set a Long-Term Strategic Direction for Amtrak, but This 

Direction Lacked Detail and Was Not Fully Implemented 

The Board established a strategic direction for Amtrak with its April 2005 Amtrak 

Strategic Reform Initiatives and FY 2006 Legislative Grant Request. This is an 

important role for the Board because, unlike a typical public corporation, there are 

many different viewpoints regarding how Amtrak should carry out its role in 

providing intercity passenger rail service. In fact, the different goals supported by 

various stakeholder groups, such as maximizing revenue, maximizing ridership, 

minimizing costs, and minimizing losses, can be mutually exclusive. In contrast, 

the goal of most corporations is to create and increase shareholder value. The 

Amtrak Board is responsible for balancing competing goals for Amtrak and 

articulating a strategic direction for the corporation, within the limits of the 

policies and requirements established in law. 

The April 2005 document specified Amtrak’s key long-term goals and 

performance objectives as: (1) the development of passenger rail corridors through 

a federal-state capital matching program; (2) the return of the Northeast Corridor 

infrastructure to a state of good repair; (3) the establishment of performance 

measures for long distance routes; and (4) the introduction of competition in all 

passenger rail functions and services. It also outlined Amtrak’s long-term 

structural, operational and legislative strategic initiatives. 

Also, the Board reviewed, but did not formally approve, a mission statement at its 

April 2006 meeting. Amtrak officials told us the Board was comfortable with the 

statement, but wanted to make minor adjustments to it. This effort was put on 

hold to permit the new CEO to have input. The draft mission statement is 

currently used by Amtrak senior management and included in the orientation 

briefing package for new board members. Together, the April 2005 plan and the 

draft mission statement provide high-level strategic direction to generally guide 

Amtrak management and employees in the performance of their duties. 

However, the April 2005 document’s broad, long-term objectives were not 

translated into a detailed plan with outcomes, milestones, and performance 

measures. According to Chairman Laney, this was due, in part, to the previous 

CEO’s strong resistance to the planning process and the transition to a new CEO 

and restructured senior management team. In addition, the step-by-step plans for 

each specific reform initiative promised in the April 2005 document; including 

business plans, budgets, policies, milestone goals, and timetables; have been 

completed for some but not all the initiatives. As a result, the Board and Amtrak 
8

management have lacked a comprehensive standard against which to evaluate 

whether Amtrak’s day-to-day activities are addressing the Board’s strategic vision 

for Amtrak. 

During the past several months, the Board has worked with Amtrak senior 

management to update the April 2005 strategic plan. In June 2007 the Board 

approved an updated plan for FY 2007 to 2008. The updated, but abbreviated, 

plan outlines Amtrak’s financial and performance priorities and includes 

measurable, near-term goals and deadlines for most initiatives. It focuses on 

company-wide cost reductions and revenue enhancements that will help in 

reducing Amtrak’s reliance on Federal operating subsidies, containing cost 

growth, improving financial transparency, providing a safe environment for 

employees and passengers, improving human capital management, conserving 

natural resources, and expanding state corridor services where circumstances and 

resources permit. 

Compared to the April 2005 plan, this plan has a much shorter timeframe (15 

months vs. 5 years), and places less emphasis on both evolving Amtrak into a 

purely operating company and introducing competition into the provision of 

intercity passenger rail service. Finally, the revised plan provides only a limited 

number of long-term goals, called strategic policies, none of which are quantified. 

The Board Has Limited but Sufficient Tools To Conduct Oversight 

and Hold Management Accountable 

We found that the Board has sufficient tools to conduct oversight and hold 

management accountable even though it does not have all the tools that are 

available to other corporate boards. 

The formal oversight and accountability tools available to the Amtrak Board 

include the authority to withhold approval of, or require modification to, proposed 

annual legislative and grant requests, budgets, within-year budget reallocations, 

consultant contracts, and executive-level hires and promotions. In addition the 

Board may replace a CEO or other senior executive. The informal tools include 

the ability to challenge the corporation’s performance and management proposals 

by asking incisive questions; examine the key assumptions and trade-offs 

underlying management’s proposals; ensure there is a reasonable, well-informed, 

thoughtful corporate decision making process and request detailed briefings at 

board meetings on areas of concern. Another tool for holding management 

accountable is Amtrak’s pay-for-performance system, scheduled to go into effect 

at the start of the next fiscal year. 
9

While the Board does conduct oversight and takes steps to hold management 

accountable, it does not have all the tools available to other corporate boards. For 

example, the Amtrak Board does not have the final say on funding or all policy 

issues. This is because Congress determines Amtrak’s overall funding level 

through the annual appropriations process and sets policy through legislation and 

the Administration approves both how funds are spent and certain Board 

decisions. 

We found that the Board followed many corporate governance best practices, 

particularly those related to board independence, which directly affect its ability to 

conduct oversight and hold management accountable. The Enron scandal of 2001 

was viewed by many as evidence that some corporate boards lacked the necessary 

ability to conduct meaningful oversight. After Enron, for example, both the New 

York Stock Exchange and the NASDAQ Stock Market adopted new listing 

standards seeking to improve board oversight by increasing board independence. 

The practices that contribute to the Amtrak Board’s independence are: 

(1) ensuring that Board members are not dependent on management for their 

positions on the Board; (2) meeting regularly without the CEO or other Amtrak 

executives to discuss sensitive topics; (3) setting its own agenda, in consultation 

with the CEO; (4) having full and direct access to top-level executives, outside 

advisors, and consultants; and (5) meeting independently with the outside financial 

auditor. In many ways, the Amtrak Board is more independent than other 

corporate boards in which Board members have direct personal, family or 

professional ties to the CEO; have less direct access to information; and are led by 

a CEO who also serves as Board Chairman. 

While the Board Conducts Oversight and Holds Management 

Accountable, Its Practices Could Be Improved 

We found that the Board has shown a willingness to conduct oversight and hold 

management accountable. For example, the Board regularly questions 

management’s proposals and at times, requires management to either provide 

further justification or modify proposals before the Board approves them. It has 

also replaced a CEO and other senior management officials. 

Nevertheless, we believe the Board’s system of oversight and accountability could 

be improved by implementing some corporate governance best practices and 

formalizing some of its procedures. First, a best practice the Board did not follow 

is evaluating the timeliness and adequacy of information it receives. As a result, 

the Board does not always have the information needed to independently evaluate 

Amtrak’s performance and plans. For example, the Board does not receive the 
10

staffing information6 needed to evaluate management’s proposed salary and wage 

expenses, the largest component of Amtrak’s operating costs. 

The Board Chairman told us that he has recognized the need for better and more 

reliable information; he also noted that the quality of information the Board 

receives has improved in recent years and the Board’s Finance Committee Chair 

has begun to work with management on this issue. Also, he stated that, ultimately, 

the Board receives whatever information it requests, in the format requested, if 

that information is available to Amtrak. However, this is an ad hoc process rather 

than a forward looking, comprehensive process designed to ensure that the right 

information is available to the Board when it is needed. 

The Board also does not regularly review its own effectiveness in carrying out its 

duties. Such reviews can range from a simple self assessment completed and 

analyzed by the Board members to the hiring of outside consultants specializing in 

corporate governance. We believe this type of annual review would help identify 

areas in which the Board’s practices and oversight could be improved. Therefore, 

we recommend that the Board amend its Statement of Policy to require at least an 

annual review of (1) the timeliness and adequacy of the information it receives and 

(2) its own effectiveness in carrying out its fiduciary and oversight responsibilities. 

In addition, we found that some of the Board’s limited time during its 10 annual 

board meetings was spent considering and voting on relatively insignificant items. 

Figure 1 lists all the items in the Statement of Policy that require Board approval. 

Management, in turn, devotes time and resources to preparing supporting materials 

for these votes. For example, the Board was required to review and vote on a 

proposed 5 year lease with a donut shop at an Amtrak-owned station with annual 

payments of only approximately $100,000. We note that in some instances, such 

as with capital reprogrammings, the requirement for Board approval of some 

seemingly small ticket items may provide some useful information regarding the 

status of the underlying program. However, to better utilize the Board’s and 

management’s limited time, we recommend that the Board amend its Statement of 

Policy to provide better guidance and more flexibility with respect to the types of 

actions requiring its approval. 

 

6

 For example, the Board does not receive data on full-time equivalent work years (FTE) which drives salary and wage 

costs. An FTE is equal to 2080 hours of work regardless of the number of employees needed to work those hours. 

For example, two half-time employees equal one FTE. Instead, the Board receives staffing data in terms of 

headcount, which measures the number of employees working at a particular point in time and is not directly related 

to salary or wage costs. 
11

Figure 1. Actions or Items Requiring Board Approval 

• Annual corporate budget 

• Annual grant and legislative request 

• Corporate strategic business plan 

• Collective bargaining agreements 

• Operation of new routes 

• Route discontinuances 

• Legal settlements greater than $1 million 

• Capital/lease commitment approval requests (CARs) included in annual budget when 

they exceed $1 million 

• Reprogramming of CARs in excess of $1 million 

• Addition of new CARs in excess of $500,000 (if not included in approved budget) 

• Cost overruns on approved CARS in excess of $250,000 or 5% of the original amount 

(whichever is less) 

• Sale or retirement of fixed assets (other than rolling stock/real estate) in excess of $1 

million 

• Revenue producing real estate transactions of $500,000 or more and all development 

projects 

• Contracts for consultant services of $200,000 or more 

• Any proposed personnel action regarding an Executive employee 

Finally, as we noted previously, some of the Board’s oversight tools are informal, 

such as its willingness to ask incisive questions. The Board’s willingness to ask 

questions cannot be mandated, but the results of its oversight can be made more 

transparent to external stakeholders. To this end, we recommend that the Board 

amend its Statement of Policy to (1) require management to submit for the Board’s 

approval an annual multi-year strategic plan with measurable goals and 

performance objectives and (2) require Amtrak to publish an annual evaluation of 

its performance against the previous year’s goals. 

Board Members’ Expenses Comply With Corporate Guidelines and 

Are Reasonable 

We found that between 2002 and 2006, board members’ compensation (Director’s 

fees) and expense reimbursements were a minor part of Amtrak’s overall expenses 

and complied with the guidelines contained in the Board’s Statement of Policy. 

The average annual cost for Board compensation and expenses during this period 

was $95,434 (see Figure 2). Of this average annual amount, $44,340 was for 

Director’s fees, $33,344 was for airfare,7

 $13,026 was for hotel and meals, and 

$4,725 was for other expenses. By comparison, Amtrak’s average annual 

operating expenses during this time period were $3.04 billion. 

 

7

 During this period, the Board Chairman frequently flew first class, although these flights were almost always 

promotional upgrades that were priced at the unrestricted coach fare. 
12

Figure 2. Amtrak Board Expenses by Type (2002 – 2006) 

54.6

36.6 27.6

54.0 48.9 44.3

40.0

31.4

22.2

79.5 82.4

51.1

0

50

100

150

2002 2003 2004 2005 2006 5 Year

Average Directors Fees Expenses

According to the Board’s Statement of Policy, board members8

 receive a $600 

Director’s fee for participating in a regularly scheduled Board meeting, a $500 fee 

for participating in Amtrak-related duties (not including attendance at a regularly 

scheduled Board meeting)9

 if such performance exceeds 3 hours, and a $250 fee 

for performance of duties if such performance is 3 hours or less. Board members 

also are reimbursed for travel expenses related to board meetings and their 

performance of duties and for other reasonable expenses (such as photocopies, 

postage, etc.) incurred in connection with the performance of their duties. 

The Amtrak Board’s responsibilities are similar to that of other for-profit private 

corporations, but its compensation is significantly less.10 Amtrak is not in a 

position to compensate board members at levels comparable to industry standards, 

nor should it. The Amtrak Board Chairman told us that board members serve, in 

part, out of a sense of public service. However, he also said the compensation 

limitations may limit the pool of potential new members since it can cause Board 

members to pay some costs “out-of-pocket.” 

 

8

 The Department of Transportation’s representative on the Board does not receive either compensation or expense 

reimbursement from Amtrak. 9

 Performance of duties includes participation in Board committee meetings, conferences, or meetings with members 

of management regarding corporate business that is properly subject to Board consideration, on–site visitations of 

corporate facilities relating to corporate business that is properly subject to Board consideration, and advice and 

assistance on Board matters when requested by the Chairman of the Board. Performance of duties does not include 

travel time, casual visits to corporate headquarters or other facilities, or personal travel. 10 According to a board remuneration study completed by Steven Hall & Partners, the average 2006 compensation (not 

including expenses) for board members for corporations with less than $2.5 billion in revenues was $142,112. ($ in thousands) 
13

The Board has a system to review expenses for suitability before they are paid. 

We found that the reimbursement policy sufficiently ensures the prudent use of 

corporate resources and that no abuses of the policy have occurred. New board 

members are advised during their orientation that only “reasonable” expenses are 

reimbursed. Both the Board Chairman and Amtrak’s General Counsel told us that 

board members are sensitive to the appearance of extravagance and, therefore, do 

not request unreasonable reimbursements. These statements are supported by the 

fact that, on occasion, board members will not request reimbursement for the full 

airfare or hotel costs they personally incurred if they felt that amount would be 

excessive. To ensure reasonableness, all Board expenses are reviewed by the 

Amtrak General Counsel’s Office before being paid. Issues regarding 

reimbursement requests are raised to the Amtrak CEO and resolved between the 

CEO and the Board Chairman and, if necessary, the full Board. 

The absence of specific limits in the Board expense reimbursement policy has 

raised concerns among some observers that the policy could be abused. For 

example, since they are not Amtrak employees, Board members are not subject to 

the reimbursement policy covering Amtrak employees, which includes specific 

limitations and prohibits reimbursement for purchases of alcohol. We believe the 

current review process is sufficient to prevent such abuses and is commensurate 

with the limited amount of funds involved. 

RECOMMENDATIONS 

We recommend that the Amtrak Board of Directors: 

1. Amend its Statement of Policy to require at least an annual review of (a) the 

adequacy and timeliness of the information it receives and (b) its own 

effectiveness in carrying out its fiduciary responsibilities; 

2. Amend its Statement of Policy to provide better guidance and more 

flexibility with respect to the types of actions requiring its approval, and 

3. Amend its Statement of Policy to require (a) management to submit for the 

Board’s approval an annual, multi-year strategic plan with measurable goals 

and performance objectives and (b) Amtrak to publish an annual evaluation 

of its performance against the previous year’s goals. 
14

AMTRAK BOARD OF DIRECTORS COMMENTS AND OFFICE OF 

INSPECTOR GENERAL RESPONSE 

We provided Amtrak’s Board of Directors with a draft of this report. In his 

response, the Board Chairman agreed that there is room for improvement in the 

Board’s oversight of management’s implementation of Board policy direction for 

Amtrak. Specifically, the Chairman indicated the Board would implement 

Recommendation 1 at its October 2007 meeting through a revision to its Statement 

of Policy. The Chairman agreed with Recommendation 2 and indicated an 

internal process is underway to reassess and revise the types of actions that require 

Board consideration and approval. We understand this proposal will be brought to 

the Board for consideration this fall. We concur with the Board’s responses to 

these recommendations. 

With regards to Recommendation 3, The Board Chairman agreed with the 

importance of having a multi-year strategic plan that was periodically updated, but 

suggested these updates could occur, at times, on a bi-annual instead of an annual 

basis. The Chairman disagreed with Recommendation 3(b), which called for an 

annual evaluation of Amtrak’s performance against the previous year’s goals, 

because the information needed to assess Amtrak’s performance is already 

available through a variety of means. 

We recognize the time and effort required of the Board and Amtrak to fully 

develop a multi-year plan and that circumstances may not always warrant an 

annual revision. Therefore, we concur with the Board’s proposal to update the 

multi-year plan as needed, but at least on a bi-annual basis. In general, the 

information needed to evaluate Amtrak’s performance against its goals is publicly 

available from different sources. As long as this information remains publicly 

available in a timely manner, Amtrak is meeting the intent of our recommendation. 

We appreciate the courtesies and cooperation of the Amtrak Board and Amtrak 

representatives during this review. If you have any questions concerning this 

report, please call David Tornquist, Assistant Inspector General for Competition 

and Economic Analysis at (202) 366-1981 or Mitch Behm, Program Director, at 

(202 366-1995. 

# 
Exhibit A. Scope and Methodology 

15

EXHIBIT A. SCOPE AND METHODOLOGY 

Scope 

In a letter to the Acting Inspector General, the Democratic Members of the House 

Working Group on Amtrak requested that our office assess whether the structure 

and activities of Amtrak’s Board of Directors are adequate to meet its legal and 

fiduciary responsibilities and whether the Board’s expenses comply with corporate 

guidelines. The Working Group was a bi-partisan group of Members of Congress 

established by the House Committee on Transportation and Infrastructure to 

explore the long-term viability of Amtrak. 

As agreed to with the requestors, our objectives in this audit were to determine 

(1) the rules, procedures, and authorities under which the Board operates; 

(2) whether the Board has followed established processes and procedures; 

(3) whether the Board has set long-term goals and objectives for Amtrak; 

(4) whether the processes and procedures that the Board follows are sufficient for 

ensuring oversight of and requiring accountability from Amtrak management; and 

(5) whether the board members’ expenses comply with corporate guidelines and 

whether those guidelines ensure the prudent use of corporate resources. 

Our audit reviewed (1) the laws, rules, and policies governing Amtrak’s Board of 

Directors, (2) the Board’s practices and decisions as reflected in regularly 

scheduled Board meetings, and (3) Board members’ expenses from 2002 to 2006. 

There has been no prior audit coverage of the Amtrak Board of Directors by the 

Department of Transportation’s Office of Inspector General. 

Methodology 

To determine the rules, procedures, and authorities under which the Board 

operated, we first reviewed Amtrak’s articles of incorporation, bylaws, and the 

Board’s Statement of Policy as well as all other relevant legislation. Such 

legislation included the Amtrak Reform and Accountability Act of 1997 and DC 

Code Section 21-101, otherwise known as the DC Business Corporation Act. 

To determine whether the Board complies with its rules and procedures, the 

Assistant Inspector General for Competition and Economic Analysis (AIG) 

attended all Board Meetings from March of 2006 to June 2007. In addition to the 

AIG’s observations of Board practices during Board meetings, we read Boardapproved meeting minutes from 2002 to April 2007. We reviewed the meeting 

minutes and other Board-approved documents to find relevant information 

regarding the establishment of long-term goals and objectives, management 
16

Exhibit A. Scope and Methodology 

accountability, and Amtrak’s corporate governance practices. In addition, we 

interviewed Board Chairman David Laney, President and CEO Alexander 

Kummant, as well as Amtrak’s then General Counsel Alicia Serfaty regarding 

Board policy, practice, and governance. We also spoke to other Amtrak 

executives regarding specific issues. 

Because the Government Accountability Office (GAO) had previously conducted 

an audit of Amtrak management, which included an evaluation of the Board, we 

also met with the GAO audit team that worked on that project to discuss its 

findings and to gather any relevant information. 

In addition, we conducted a literature review of corporate governance best 

practices in order to benchmark the Board’s ability to conduct oversight, hold 

management accountable, and establish long term objectives. Our review of best 

practices included the Business Round Table whitepaper, Principles of Corporate 

Governance,11 a Report of the American Bar Association Task Force on Corporate 

Responsibility12 and the American Bar Association Corporate Director’s 

Guidebook.

13 From these documents, we identified best practices that were 

relevant to Amtrak. We noted any areas in which Amtrak’s Board practices were 

not in compliance with best practices we identified. 

Regarding the Board’ expenses, we documented all policies and procedures that 

relate to expense reimbursement and compensation for the Board of Directors14. 

During our interviews with Amtrak management and Chairman Laney, we also 

discussed and noted any standard practices regarding compensation and expense 

reimbursement. We obtained records of board member expenses reimbursed by 

Amtrak as well as all Director’s Fees paid to board members, between 2002 and 

2006 to determine if the records indicated compliance. We also reviewed 

whistleblower information provided to us by the requestors. 

We noted and requested clarification from Amtrak management of expenses that 

appeared to have been either unreasonable or out of compliance with Board rules. 

In virtually all cases, these apparent discrepancies proved to be clerical errors. We 

also reviewed current practices regarding corporate board compensation. 

 

11 The Business Roundtable. Principles of Corporate Governance. May 2002. 12 American Bar Association. Report of the American Bar Association Task Force on Corporate Responsibility. 

March 31, 2003. 13 American Bar Association. Corporate Directors Guidebook. 2004, 4th Edition. 14 These policies include: The DC Business Corporation Act, The National Passenger Railroad Corporation Bylaws, 

and the Board Adopted Statement of Policy. 
Exhibit B. Amtrak Board Membership, 2002 - Present 

17

EXHIBIT B. AMTRAK BOARD MEMBERSHIP, 2002 - PRESENT 

Table 2 displays the names of all Amtrak board members since 2002 as well as the 

month of the confirmation (or recess appointment) and expiration of each 

member’s appointments. 

Table 2. Amtrak Board Membership 2002-Present 

Board Member Term 

R. Hunter Biden* July 2006-Present 

Sylvia A. de Leon January 1994-June 1998 

July 1999-August 2004 

Michael S. Dukakis June 1998-June 2003 

Floyd Hall* July 2004-December 2005 

January 2006-Present 

A. Linwood Holton September 1998-September 2003 

David M. Laney* November 2002-Present 

Donna McLean* June 2006-Present 

Norman Mineta July 2001-July 2006 

Mary Peters* October 2006-Present 

Amy Rosen February 1996-June 1998 

September 1998-September 2003 

John Robert Smith July 1998-June 2003 

Enrique Sosa August 2004-December 2005 

January 2006-February 2007 

*Current Amtrak board members 

The Secretary of the Department of Transportation is a voting member of the 

Board. However, the Secretary may designate a representative to sit on the 

Amtrak Board of Directors. Table 3 displays Secretarial designees since 2002. 

Table 3. Secretarial Designees 

Designee Term 

Michael Jackson June 2001-August 2003 

Allan Rutter August 2003-June 2004 

Kirk Van Tine June 2004-December 2004 

Jeff Rosen January 2005-June 2006 

Joseph Boardman October 2006-Present 
Exhibit C. Major Contributors to This Report 

18

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT 

THE FOLLOWING INDIVIDUALS CONTRIBUTED TO THIS REPORT:

Name Title 

David Tornquist Assistant Inspector General for 

Competition and Economic 

Analysis 

Mitchell Behm Program Director 

Debra Mayer Project Manager 

Andrew Sourlis Analyst 

Lisa Mackall Auditor 

Dawn Boswell Analyst 
Appendix. Response From Amtrak’s Board of Directors 

19

APPENDIX. RESPONSE FROM AMTRAK’S BOARD OF DIRECTORS 

NATIONAL RAILROAD PASSENGER CORPORATION 

60 Massachusetts Avenue, NE, Washington, DC 20002 

tel 202 906.3740 fax 202 906.2921

David M. Laney 

Chairman, Arntrak Board of Directors

September 11, 2007 

The Honorable Calvin L. Scovel III 

U. S. Department of Transportation 

Office of the Inspector General 

1200 New Jersey Avenue, SE 

7th Floor - West Building 

Washington, DC 20590 

Re: National Railroad Passenger Corporation (Amtrak) Comments on U.S. Department of 

Transportation, Office of Inspector General report, “Amtrak’s Board Of Directors Provides 

Leadership To The Corporation But Can Improve How It Carries Out Its Oversight 

Responsibilities”. 

Dear Inspector General Scovel: 

Amtrak agrees with much of the analysis and all but one of the recommendations of the U.S. 

Department of Transportation, Office of Inspector General (DOT OIG) report regarding the 

Amtrak Board of Directors entitled “Amtrak’s Board Of Directors Provides Leadership To 

The Corporation But Can Improve How It Carries Out Its Oversight Responsibilities.” In 

particular, we agree that there is room for improvement in the Board’s oversight of 

management’s implementation of Board policy direction for Amtrak; we would concede as 

well that there always will be. Amtrak also agrees with the conclusions of the DOT OIG that, 

within practical tolerances, the Board is in compliance with its governing documents, that it 

has adequate tools to oversee and hold Amtrak management accountable, and that Board 

expenses both comply with Amtrak guidelines and are reasonable. 

The DOT OIG report appropriately recognizes certain reasons why the Amtrak April 2005 

Strategic Initiatives document was not fully developed into a plan detailing performance 

measures. Those obstacles delaying that development are past, and Amtrak management and 

senior staff now have greater resources, capacity and focus on that aspect of planning. 

Moreover, the scope and quality of information necessary for the development of such detail 

have been materially improved. 
20

Appendix. Response From Amtrak’s Board of Directors 

The Honorable Calvin L. Scovel III 

September 11, 2007 

Page 2

Amtrak agrees with the DOT OIG that the Board has tools to enable adequate oversight and 

accountability. To the tools referenced by the OIG, we would add that each Board member 

has access, through Board meetings and newly reconstituted Board committees (each with 

assigned management support), to Amtrak senior managers for information and perspective, 

and the current Board is not reticent in utilizing such access. 

Amtrak agrees fully that the Board is not in a position to review Amtrak’s capital program on 

a project by project basis, or to approve each capital project on the scale of $1 million; yet it 

is critical for the Board’s fulfillment of its fiduciary duties, and otherwise in the company’s 

interests, that the Board develop an understanding of, and ultimately approve, the process by 

which Amtrak identifies, prioritizes, budgets and implements capital projects, as well as an 

understanding of the schedule and anticipated risks and outcomes of chosen priorities. The 

Board, working with senior management (including Amtrak’s new Chief Financial Officer), 

is developing a revised approach to inform the Board about Amtrak’s capital program, 

including priorities and budget, and capital reprogrammings and a revised method of 

bringing the program, its budget and necessary reprogrammings to the Board both for 

informational purposes and for approval. It is expected that the Board will consider and adopt 

revisions to its current approach and methodology no later than the October 2007 Board 

meeting. The Board Statement of Policy will be revised appropriately. 

Regarding the DOT OIG’s apparent reservations regarding Amtrak’s updated 2007 strategic 

planning document because of its 15 month time frame (as opposed to the five years of the 

April 2005 Strategic Initiatives document), the Board concluded that the shorter time frame, 

with more granular measures than a multi-year plan would allow, would be of greater value 

to Amtrak management at this point, was more practicable considering Amtrak's information 

systems constraints, and would provide an important foundation for a subsequent, longerterm strategic planning document. 

Finally, with respect to the specific recommendations contained in the DOT OIG report, 

Amtrak’s comments are as follows: 

1. Amend its Statement of Policy to require at least an annual review of (a) the 

adequacy and timeliness of the information it receives and (6) its own effectiveness 

in carrying out its fiduciary responsibilities. 

The Board agrees with this recommendation and intends to have the Board 

Statement of Policy so amended at the Board’s October 2007 meeting, At that same 

meeting, the Board expects to approve a form of annual evaluation of the adequacy 

and timeliness 
21

Appendix. Response From Amtrak’s Board of Directors 

The Honorable Calvin L. Scovel III 

September 11, 2007 

Page 3

of the information it receives as well as its own effectiveness in carrying out Board 

responsibilities. 

2. Amend its Statement of Policy to provide better guidance and more flexibility with 

respect to the types of actions requiring its approval. 

Both the Amtrak Board and management agree with this recommendation, and as the 

DOT OIG is aware, Board members and management personnel have begun the 

reassessment and revision of the types and financial/value levels of matters requiring 

Board approval. 

3. Amend its Statement of Policy to require (a) management to submit for the Board’s 

approval an annual, multiyear strategic plan with measurable goals and 

performance objectives and (b) Amtrak to publish an annual evaluation of its 

performance against the previous year’s goals. 

The Amtrak Board and management consider part (a) of this recommendation a 

valuable suggestion if amended to eliminate unnecessary burden without affecting 

the substance and merit of a multi-year strategic plan approach. Practically speaking, 

the process of, each year, developing a full multi-year strategic plan of a level of 

quality satisfactory to the Board would present capacity challenges without a 

material added value return. But a multi-year strategic plan which, once filly 

developed, would be updated and extended periodically (or more if possible and 

needed to lay out strategic direction) is an excellent and achievable suggestion. 

Whether the process would occur annually or bi-annually is a matter to be 

considered by the Amtrak Board. 

Amtrak does not concur with part (b) of this DOT OIG recommendation – that 

Amtrak publish an annual evaluation of its performance against the previous year’s 

goals. Such a requirement would only add to Amtrak’s administrative burdens 

without offering new information or analysis to the DOT, Congress or the public. 

Virtually all information relating to Amtrak's fiscal and operating performance, 

including year over year, is transparent to and available to DOT, Congress and the 

public through Amtrak's required reports and filings, through Federal Railroad 

Administration, DOT and Congressional oversight (including Congressional 

hearings), and through Amtrak's web site, annual report and public affairs/corporate 

communications offices and resources. Respectfully, we see no added value in this 

proposal. 
22

Appendix. Response From Amtrak’s Board of Directors 

The Honorable Calvin L. Scovel III 

September 11, 2007 

Page 4

In closing, our appreciation of the effort on your part in examining Amtrak Board functions 

and highlighting opportunities for improvements. We look forward to working with you 

going forward. 

Sincerely, 

David M. Laney 

Chairman of the Board
508 Compliant Charts and Tables 

Amtrak’s Board of Directors Provides Leadership to the Corporation But Can 

Improve How It Carries Out Its Oversight Responsibilities 

Figure 2. Amtrak Board Expenses by Type (2002 – 2006) 

54.6

39.98

36.6

31.44

27.6

22.2

54

79.49

48.9

82.36

44.34

51.09

2002 Directors Fees

2002 Expenses

2003 Directors Fees

2003 Expenses

2004 Directors Fees

2004 Expenses

2005 Directors Fees

2005 Expenses

2006 Directors Fees

2006 Expenses

5 Year Average Directors Fees

5 Year Average Expenses

Data Table for Figure 2. 

 2002 2003 2004 2005 2006

5 Year 

Average 

Directors Fees $54.60 $36.60 $27.60 $54.00 $48.90 $44.34

Expenses $39.98 $31.44 $22.20 $79.49 $82.36 $51.09

 

2002 Directors Fees 54.6 

2002 Expenses 39.98 

2003 Directors Fees 36.6 

2003 Expenses 31.44 

2004 Directors Fees 27.6 

2004 Expenses 22.2 

2005 Directors Fees 54 

2005 Expenses 79.49 

2006 Directors Fees 48.9 

2006 Expenses 82.36 

5 Year Average Directors 

Fees 44.34 

5 Year Average 

Expenses 51.09