Network Rail chiefs pocket £1m bonuses as profits fall

Click to follow

John Armitt, the chief executive of the company which owns Britain's tracks, signalling and stations, and his three fellow executive directors each received a 30 per cent increase in bonus payments after a long-term incentive plan kicked in.

The increases took Mr Armitt's pay to £857,000, including a bonus of £353,000, while the deputy chief executive, Iain Coucher, was given a £314,000 bonus, lifting his pay to £764,000. The finance director, Ron Henderson, and the projects and engineering director, Peter Henderson, each earned £571,000, including bonuses of £235,000.

In contrast, Network Rail's 32,000 employees each received individually bonuses of just £954, down from £1,112 the previous year.

Ian McAllister, Network Rail's chairman, defended the boardroom bonuses on the grounds that train punctuality, the condition of the network and the company's financial efficiency had all improved last year. Reliability was back to the level before the Hatfield crash in October 2000, with 86.4 per cent of trains running on time and 90 per cent punctuality in the first four months of this year.

"This was an industry in meltdown when we took it over," he said. "The company was a broken organisation and it has been completely re-engineered."

Mr McAllister said that it had been a condition of Network Rail's licence to put in place the long-term incentive plan, which paid out in addition to the annual performance bonus. It was also necessary to attract and retain executives who would otherwise go and work for FTSE100 companies.

Network Rail said its finances would improve this year because of a £1.5bn increase in government funding and forecast an after-tax profit of £850m for 2006-07.

Mr Armitt said Network Rail was now looking at ways of including a measure in the bonus scheme to reflect the management's success in increasing the capacity of the network. With passenger numbers expected to grow by 250 million, or 25 per cent, over the next 10 years, track availability would become the biggest issue for the company.

He also said Network Rail was looking at raising debt under its own steam, although this would not happen until 2009. It has £18bn of borrowings at present, which are guaranteed by the Government. This will rise to £21bn over the next three years.

Comments