UK: Network Rail bosses give up bonuses

[John Ashworth]

Network Rail bosses give up bonuses

ALAN JONES MONDAY 06 FEBRUARY 2012
The Independent

The chief executive and other directors of Network Rail have decided not to take any bonuses and to allocate the money to safety improvements instead.

The executives were facing increasing political pressure not to receive any extra money this year in the wake of the huge row over bonuses for banking and other bosses.

The issue was due to be discussed on Friday at a Network Rail (NR) meeting, which the board is now recommending should be adjourned.

NR chairman Rick Haythornthwaite said: "Friday's meeting was not to approve a specific annual bonus payment for executive directors, but rather to amend a previously-approved long-term incentive scheme to ensure additional external scrutiny of performance.

"The issue of annual performance payments would only arise if Network Rail surpassed stretching performance thresholds and would only be decided in May after the end of the financial year.

Chief executive Sir David Higgins said: "Even if this situation does arise this year, I and my directors decided last week that we would forego any entitlement and instead allocate the money to the safety improvement fund for level crossings. I can confirm that remains our intention."

NR said in a statement: "The board of Network Rail has decided to recommend to its members that this Friday's meeting be adjourned. The board will take the opportunity to reflect further on how to incentivise performance in the company against the backdrop of the current context.

"It will continue to consult the Secretary of State on wider issues of governance in advance of the Government's command paper."

Transport Secretary Justine Greening had announced that she would attend this week's meeting and vote against the bonus payments.

Downing Street said that Ms Greening would be putting forward proposals for reform of Network Rail's governance structures.

"Justine Greening has made clear that she wants to look at the governance of Network Rail and she is going to be announcing some proposals to improve the governance in the future," said the Prime Minister's official spokesman.

"She made very clear over the weekend that there are problems with the way the corporate governance of this company has been set up.

"The point is that the ownership of Network Rail was set up in a very specific way, which prevented the Government interfering in the day-to-day running of that company.

"So there is a limit to what we can and cannot do, but we are looking very carefully at the corporate governance of Network Rail and thinking about how we can improve it."

Six NR executives are affected by today's announcement, although sources stressed that no decision had even been taken on this year's award.

The remuneration committee usually meets after the end of the financial year at the end of March to agree a figure.

The executives did not receive a bonus last year either. Sir David, who is paid a salary of £560,000 a year, will not be adding to his statement, said a spokesman.

Manuel Cortes, leader of the TSSA rail union, welcomed the decision by NR bosses to donate their "six-figure" bonuses this year to improving safety at level crossings.

"We said last week that it beggared belief that NR could be talking about a multimillion, long-term bonus scheme within days of admitting criminal behaviour over the deaths of two schoolgirls at Elsenham six years ago.

"That tragedy only happened because it refused to spend £2 million on a new bridge at the level crossing despite an internal safety report demanding such action.

"This decision is sadly too little, too late for the parents of the girls who tragically died. But we welcome it as the first step in the direction of the directors starting to put safety and the passengers ahead of their own handsome rewards."

Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said: "Passengers will rightly expect that any decisions taken by the Department for Transport and others to have the needs of passengers placed at the heart of those decisions.

"Passengers are less concerned about Network Rail bonuses than they are about value-for-money rail fares on punctual, reliable and frequent train services. However, these potential bonuses might set passengers wondering when their performance bonus - more trains on time - will arrive."


Rail chiefs give their bonuses to new safety improvements

Craig Woodhouse and Joe Murphy
Evening Standard 6 Feb 2012

Network Rail bosses today bowed to pressure and agreed to give up bumper bonuses which were exposed by the Evening Standard.

Chief executive Sir David Higgins said he and other directors would waive their bonuses and donate the money to safety improvements.

It follows unprecedented political pressure, with Transport Secretary Justine Greening saying she was opposed to the awards.

It will pile pressure on Barclays chief executive Bob Diamond to follow suit and give up some of his bonus when it is announced this week.

He is expected to get a pay package worth over £10 million when the bank unveils profits of between £5.5 billion and £6 billion.

Tomorrow, Labour leader Ed Miliband will lead an Opposition Day debate against "the bonus culture" in the City in general.

Shadow transport secretary Maria Eagle claimed she had "discovered" that the Network Rail scheme could not be brought in without written approval from the minister. "Justine Greening must now decide if she is going to act to stop the taxpayer-funded Network Rail's bonus plan," she said.

The Department for Transport said the rules did not require the minister's approval of the details of the bonus scheme, only if there was a change to the policy of having bonuses or not.

Ms Greening had earlier said she would attend NR's AGM on Friday to vote against the bonuses.