The chief executive of Network Rail is giving up his bonus to avoid a furore over remuneration distracting attention from the group's progress.
Although an exact figure for Iain Coucher's 2008-09 bonus is yet to be calculated, it was expected to run well into six figures. Last year, he took home an extra £306,000 on top of his £529,000 salary, and a further £214,000 under the company's long-term incentive plan. Although he is withdrawing from the bonus system, he will accept any payments offered under the long-term scheme.
The decision to forgo the bonus was a personal decision, said Mr Coucher. "I want to be able to talk freely about Network Rail's story of success and how it has delivered for passengers not just last year but over the past five years without this story being clouded by controversy," he said. "I am mindful of current sentiment, so I have taken a personal decision to forgo any annual bonus this year. The success of our company and its hard-working people must have the opportunity to be seen and heard."
Network Rail's bonus scheme has been an ongoing debate in recent months. Chris Bolt, the chairman of the Office of Rail Regulation (ORR), has spoken out in support, maintaining it works as a substitute for the share options a listed company would offer managers.
But Lord Adonis, the Rail minister, recently described the group's performance as "mixed" and accused it earlier this year of a "serious failure to take account of passenger interests". He has also dropped heavy hints that executives should be satisfied with their basic salaries.
All Network Rail employees are expected to receive pay supplements when the remuneration committee reports back in the annual report at the end of June. Other senior executives are still in line for bonuses – totalling £730,000 last year – although pressure to copy Mr Coucher's abstemious example is likely to rise.
The company – which is the regulated, not-for-profit successor to the doomed Railtrack – claims it has met or exceeded all its performance targets for the past 12 months, despite recent reports that the five-year target to cut costs by 31 per cent has been missed by 4 percentage points.
Passenger satisfaction levels of 83 per cent have never been higher, the company says, and the 91 per cent of trains that arrive on time is also the highest national figure ever recorded. Costs have come down by £1bn a year, according to Mr Coucher.
"Our people have secured this success and every one – from signal box to boardroom – will deserve any bonus which may be awarded to recognise this," he said. "Incentivising our people makes sure that the company is focused on what it needs to do. Our people have delivered what has been asked of them and more. I believe we must honour the deal to reward their collective success."
But Network Rail's performance is not entirely without problems. In January power trouble on the West Coast main line caused repeated hold-ups, and the company has also faced criticism for the disruption caused by weekend engineering work. The ORR has ordered that the level be cut by 21 per cent over the next five years.Reuse content