Network Rail bosses waive bonuses
Monday 06 February 2012
The chief executive and other directors of Network Rail became the
latest top bosses to waive lucrative bonuses today when they decided to
give the money to safety improvements instead.
The executives were facing increasing political pressure not to receive any extra money this year amid controversy over bonuses for banking and other bosses.
The issue was due to be discussed on Friday at a Network Rail meeting, which has now been postponed, potentially leading to the six executives sharing hundreds of thousands of pounds in bonus payments on top of their salaries.
Chief executive Sir David Higgins, who is paid a basic salary of £560,000, 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."
The Prime Minister's official spokesman said: "As a general rule clearly the Prime Minister is keen to see responsibility and restraint exercised by boards of companies whether they are in the private or public sector."
Transport Secretary Justine Greening, who had announced that she would attend this week's meeting and vote against the bonus payments, said: "Network Rail's decision to postpone the meeting planned for this Friday and look again at their proposed executive bonus structure is sensible and welcome.
"I have made it clear to Network Rail at every stage that this proposed package did not go far enough in reflecting the need for restraint. It was also the wrong time to look at this issue, given I will be shortly unveiling a rail review that will strengthen the corporate governance of Network Rail and see a special director appointed to the board to represent the views of taxpayers.
"The fact that its executive directors have also chosen to forfeit their annual bonuses to improve level crossings is a sign that they have recognised the strength of public opinion."
Network Rail 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."
Six Network Rail executives are affected by the announcement, although sources stressed that no decision had even been taken on the size of any bonus.
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.
Manuel Cortes, leader of the TSSA rail union, said: "We said last week that it beggared belief that Network Rail 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."
Mick Whelan, general secretary of the train drivers' union Aslef, said of the postponement of this week's meeting: "It is encouraging that they at least appear to have tactical nous - even if they lack other qualities.
"The Network Rail directors' decisions on timing were at fault if it were indeed the case that they had decided last week to forego any entitlement and allocate the money to the safety improvement fund for level crossings.
"In similar circumstances I would have announced this before I was obliged to do so from under a heap of public criticism."
Simon Walker, director general of the Institute of Directors, said: "Justine Greening did not believe that senior executives at Network Rail merited their bonuses and said she would vote accordingly at the annual general meeting.
"We would expect this of shareholders in listed companies, and expected it of the Government in this case. Only through this kind of activism will executive pay be brought into line with performance."
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."
Last week, Stephen Hester, the chief executive of RBS, which is more than 80% owned by the taxpayer, agreed to waive his near-£1 million bonus under pressure from ministers and the Labour party.
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