Network Rail is set to provoke anger about its generous boardroom remuneration policy after it emerged that the not-for-profit company set up to run Britain's railways may award senior directors a bonus pool worth £2.7m this year.
John Armitt, chief executive of Network Rail, who earns a base salary of £450,000, his deputy Iain Coucher and three other senior directors could receive bonuses equivalent to 60 per cent of their basic pay.
That is a more generous arrangement than under Railtrack, the privatised company put into administration by the Government in 2001. Its executives could earn only 50 per cent of their basic salaries as bonuses.
Network Rail denied its remuneration policy was inappropriate given its remit of trying to rescue the rail network from administration.
"There are no fat cat share options and no rewards for failure," a spokesperson said. While Railtrack executives were paid less than their Network Rail successors, they also received share options.
Mr Armitt and his colleagues will only share in a combined bonus pool of £1.1m on top of their salaries if they hit future performance targets two years early.
If they achieve targets set out for the March 2003 to 2004 year, their bonuses will only be 20 per cent of their salaries.
Separately, the row over lavish boardroom pay will continue this week when Whitbread faces protests over controversial two-year contracts for its executives.
The National Association of Pension Funds is advising shareholders not to support the leisure group's remuneration report at its annual general meeting tomorrow.
The City has turned against two-year contracts because they can allow directors commonly thought to have done a poor job to leave the company with large pay-outs. Whitbread said new directors would join the company with a one-year notice period.
Meanwhile, WH Smith, the retail group, sought to play down weekend reports that its chief executive, Richard Handover, had a £7m pension pot. Mr Handover, 57, has been with WH Smith for 39 years and so would be in line for a generous pension under the group's final salary scheme. But the company indicated that the pot would be substantially lower.
The details will be disclosed in the retailer's annual report.Reuse content