Network Rail bonuses 'daylight robbery'

Network Rail (NR) today announced six-figure bonuses for its top directors, sparking a storm of protest led by Transport Secretary Philip Hammond.

Last month, Mr Hammond wrote to NR urging restraint and pointing out the company's top management already enjoyed "handsome" annual salaries.

But today, NR said its top directors were getting bonuses totalling more than £2.25 million, including £641,000 for chief executive Iain Coucher whose annual salary is £613,000.

NR chairman Rick Haythornthwaite said the bonuses "had been earned" but Mr Hammond said he was "very disappointed that NR executives have accepted bonuses of this scale in the current climate".

Rail unions joined in the condemnation, with RMT leader Bob Crow branding Mr Coucher's pay-out "a national scandal" and TSSA union general secretary Gerry Doherty saying Mr Coucher had "got away with daylight robbery".

There was also criticism from the Office of Rail Regulation (ORR) whose chief executive Bill Emery had branded NR's performance for 2009/10 "mixed" and who had also written to NR warning about the level of bonuses.

The ORR said it was now up to NR's remuneration committee - which had decided on the bonuses - to "fully justify how it has reached its decisions".

The performance-related pay-outs comprised an annual bonus as well as an award under a three-year rolling management incentive plan.

NR did say that the 2009/10 incentive bonus had been cut by 20%, that directors' salaries would be frozen and that next year's incentive scheme would be suspended while the remuneration committee looked into its "future sustainability".

Mr Hammond said today: "NR is of course a private company, but one that is dependant on taxpayer funding, so I am very disappointed that NR executives have accepted bonuses of this scale in the current climate.

"In the week when everyone has been asked to share the burden of reducing Britain's deficit, people will rightly be asking how NR's top executives feel this is appropriate."

Mr Hammond went on: "The upcoming review of the management incentive plan must be far-reaching and fundamental. Bonuses must be earned by exceptional performance: they should not be an entitlement.

"Sir Roy McNulty is conducting a review into rail costs and will no doubt want to consider remuneration as an element of that."

Mr Haythornthwaite said: "Network Rail only rewards for success. This is measured against what matters most to passengers - a better railway with more trains on time.

"On that basis, awards for the past year have been earned, are a contractual right and should be paid."

An ORR spokesman said: "We note that NR's remuneration committee has partly exercised its discretion in awarding reduced bonuses to the company's senior executives.

"While it is clear that the committee has considered our assessment of the company's mixed performance, it has taken a different view on some issues.

"It will now need to fully justify how it has reached its decisions. We have made clear our concerns, including on safety, asset management and efficiency - and these concerns still stand."

Mr Coucher, who announced earlier this month that he would be stepping down from his post, will get an annual bonus of £348,000 plus £293,000 from the incentive scheme.

Mr Crow said today: "While hundreds of maintenance staff face the prospect of being thrown on the dole, it is nothing short of a national scandal that Iain Coucher is walking out of the door with a golden-handshake bonus of nearly two-thirds of a million pounds."

Mr Doherty said: "These bonus payments amount to a fraud against passengers.

"This company does not own or run a single train and yet these payments are based on improved punctuality times. They are paying themselves for something they have not done."

Downing Street tonight echoed Mr Hammond's "disappointment" at the bonuses.

"In this climate where everyone is having to pull in their belt, bonuses of this scale and nature are disappointing," a No 10 spokeswoman said.