Railtrack rules out 'fat cat' share deals

PETER RODGERS

Business Editor

Railtrack has decided not to award share options to directors and senior executives, after strong government pressure to avoid a new "fat cats" row over privatisation next year.

Instead of options there is to be a long-term incentive scheme for directors based on performance, in line with the Greenbury Committee's recommendations on top pay. There will also be a share savings scheme for all employees.

Promising that Railtrack would be ready to go ahead with a flotation before next March, if the Government so decides, Bob Horton, chairman, said he understood the potential pay pitfalls in a privatisation: "We aren't complete idiots - we have seen what happened with other privatised industries. We don't intend to repeat that."

The announcement came as Railtrack revealed pre-tax profits of pounds 189m. This was after the pounds 140m cost of the signal staff strike and pounds 46m preparing for privatisation. The annual report showed that the chairman and four executive directors earned a 25 per cent bonus on their basic salaries last year - the year of the rail strike - and that two directors received interest-free mortgages.

The bonuses were worth pounds 150,000 in total but have not yet been paid because they have still not been agreed by the Department of Transport. Railtrack said the payments were going through "due process" and denied that there was any dispute with the Government.

Jimmy Knapp, leader of the RMT rail union, said: "Despite its problems, Railtrack appears more willing to waste money on obscene bonuses for the bosses rather than invest in industry." There was a similar attack from Lew Adams, general secretary of Aslef.

Mr Horton pledged that directors' salaries would be set at a level "generally acceptable to the entire company. It does mean you aren't going to see salaries double overnight for directors." Future increases in the pay of directors' must reflect company performance and be seen to be fair by the entire workforce, he said.

Sir George Young, the transport secretary, has been pressing for months - both in his new job and in his previous role as a Treasury minister - for tight restrictions on the rewards to be given to Railtrack directors. Mr Horton said the pay decision was made in the light of the Greenbury report and after discussions with Sir George. But he denied the decision was a result of government pressure. "I volunteered it myself, I didn't have my arm twisted," he said.

Nevertheless, the Government was keen to take some of the credit by insisting that there should be a mention in Mr Horton's announcement of the discussions with Sir George.

In the year to March, Mr Horton earned pounds 154,000 for a three-day week, including a bonus of pounds 31,000. John Edmonds, the chief executive, earned pounds 206,000 with a pounds 33,000 bonus. Mr Horton said that for both of them the increase over the previous year, when they worked for British Rail, was about 2 per cent - but Mr Horton waived his previous bonus and is accepting the latest one. Norman Broadhurst, finance director, earned pounds 197,000 including a pounds 38,000 bonus, David Moss, commercial director, pounds 140,000 including a pounds 25,000 bonus and David Rayner, director of safety and standards, pounds 134,000, with a pounds 23,000 bonus.

Mr Edmonds and Mr Rayner also have interest-free mortgages from Railtrack of pounds 75,000 each to buy London homes, because their jobs required their presence in the capital for extended periods. They have options to sell the homes at cost price to the company up to 2014.

There would be no radical changes in pay levels on privatisation, said Mr Horton, but added that if Mr Broadhurst went under a bus "we might well have to pay more than pounds 200,000 to get a new finance director".

The decision not to allow share options was taken by Railtrack's remuneration committee, chaired by Archie Norman, a non-executive director who as chief executive of Asda is an enthusiast for options.

Comment page 17

Railtrack remuneration

pounds 000s

Basic Allowances Benefits Bonus Pension TOTAL

salary contributions

Bob Horton 22 - 1 31 - 154

John Edmonds 132 16 11 33 14 206

Norman Broadhurst* 121 - 10 38 28 197

David Moss 100 - 4 25 11 140

David Rayner 90 2 12 23 7 134

*Includes part-time salary for 7 April to 30 June 1994 and full-time salary of pounds 150,000 per annum from 1 July 1994

Sport
World Cup 2014
Arts and Entertainment
Sheeran arrives at the 56th annual Grammy Awards earlier this year
musicYes, that would be Ed Sheeran, according to the BBC
Sport
Rio Ferdinand, Alan Shearer, Alan Hansen and Gary Lineker during Hansen's final broadcast
Sport
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
PROMOTED VIDEO
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?