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No bonuses for Network Rail chiefs

Top bosses of rail infrastructure company Network Rail (NR) will not be paid annual bonuses this year, it was announced today.

There was much criticism last year when NR top executives received more than £2 million in bonuses,

The payout, announced last June, came despite pleas for restraint from rail regulators and Transport Secretary Philip Hammond, who later questioned the appropriateness of the bonuses at a time of austerity.

The top bosses' bonuses, decided by NR's remuneration committee, are performance-related and consist of an annual bonus, as well as a three-year rolling bonus.

NR had already suspended its management incentive programme so that the whole question of bonuses could be reviewed.

Today's announcement affects nine top NR executives.

The remuneration committee's chairman Steve Russell said today: "Last year, the board suspended the management incentive framework for executive directors and, after a comprehensive review, will shortly be proposing to members a radically different approach to incentivisation from 2011/12 onwards, including transitional arrangements from extant long-term incentive plans to the new scheme."

He went on: "There remained only the question of the basis on which any 2010/11 annual bonus should be awarded. In a decision reached jointly by the remuneration committee and the executive directors, no consideration will be given to any such annual award mechanism and thus no payments will be made.

"All recognise that the public expect consistently high network reliability and overall service delivery within a strong safety culture before the top leadership of the company should become eligible for payment under any annual incentive scheme.

"We intend to retain the past arrangements for the annual incentive scheme across all other employee grades for 2010/11 based on challenging targets that were established at the beginning of the year."

Gerry Doherty, leader of the TSSA rail union, said: "We welcome this decision not to pay huge annual bonuses to the executive directors this year.

"NR's new chief executive David Higgins has started to recognise that NR are living and operating in the real world."

Last year, Mr Higgins' predecessor, Iain Coucher, received an annual bonus of more than £348,000 plus a bonus of more than £293,000 as part of the three-year rolling management incentive scheme.

Other top bosses got one-year and three-year incentive scheme bonuses running to six figures.

Before the award of last year's bonuses, Office of Rail Regulation chief executive Bill Emery branded NR's performance for 2009/10 as "mixed" and wrote to NR warning about the level of bonuses.

Mr Emery wrote to Mr Russell last week about bonuses, saying that NR would have to "justify publicly the decisions it takes while taking account of ORR's assessment of its performance".

Separately, Mr Emery announced that NR's recent performance had not been good enough and that the company would miss some annual targets.

Bob Crow, general secretary of the RMT transport union, said today: "We welcome this move as evidence that NR has moved on from the days of Iain Coucher when the company was awash with bonuses and special payments.

"We demanded that a line be drawn under that regime and we intend to hold NR to that. One statement on freezing bonuses is a start but is by no means the end of the issue."

Mr Crow went on: "The key task now is to transform NR into a genuine public body free from the corrosive effect of the private sector ethos that dragged its name through the mud during the Coucher years.

"RMT looks forward to now securing a pay deal for our members that recognises the hard work they have put in, and the changes to operations that they have agreed, and which will put staff on a firm and secure footing for the future."

Transport Secretary Philip Hammond said: "I made my views on bonuses clear to the company last year and I welcome the decision taken by NR's remuneration committee. Excessive bonuses for NR executive directors are not appropriate, particularly in the current economic climate.

"There is an urgent need to tackle the costs of the railways and the Government remains clear that bonuses should be awarded on the basis of long-term performance, and then only where there has been exceptional performance."