Railtrack bosses to double their pay

Click to follow
The Independent Online
RAILTRACK'S top executives are to double their pay with bonuses while their company abandons the long-established national railway timetable.

Railtrack schedules to be published this summer will signal the end of the traditional national timetable: a slimmed-down version to be published in June will remove many of the main-line and suburban connections and all of the bus-only tables.

In the meantime, Railtrack's six senior executives are to share bonuses of up to pounds 920,000 a year after the company is floated on the stock market next month. The directors could more than double their base salaries under the bonus scheme if they beat targets for profits and operating performance, according to sources close to the privatisation.

Bob Horton, the company's part-time chairman, could be paid a pounds 150,000- a-year bonus on top of his pounds 125,000 base salary. John Edmonds, the chief executive, could add pounds 201,000 to his pounds 168,000 base pay.

Clare Short, the Shadow transport secretary, said yesterday: "It is outrageous that just as they are planning to make themselves extremely rich, the directors of Railtrack are cynically plotting to deprive the public of information about services - no doubt so they can argue they were little- used and in future shut them down."

The truncated national summer timetable follows the scandal six months ago of the bungled winter timetable. That had to be corrected twice, at an estimated cost of pounds 1m, first with a 400-page supplement and then with a 91-page document rectifying errors. Railtrack was blamed then for failing to maintain and update the timetable database that it inherited from British Rail in the run-up to privatisation.

A confidential internal Railtrack document lays down that the summer timetable, to be published in June, will:

l Remove published connections that require more than one change of trains.

l Omit "historic" connections if the volume of business is low.

l Take out all "bus-only" tables for road services that have replaced trains - for example, the Waverley link through the Borders between Carlisle and Edinburgh, and services on the Isle of Wight.

l Eliminate connections from suburban schedules.

l Cram more details on to each page to reduce book size.

l Remove a large number of existing branch connections from mainline services.

One railway expert last night predicted chaos in train enquiry services. "They will give less reliable information," he predicted. "And Mr and Mrs Public will need a good map to find their way round the timetable, unless their knowledge of railway geography is very good."

Details of the senior executives' bonus scheme are contained in the Railtrack prospectus, due to be published tomorrow. The document also reveals that the Government plans to pay out a surprise extra dividend of pounds 65m to shareholders who subscribe for the pounds 1.8bn flotation.

The pay-out is unexpected because it is financed from profits made when Railtrack was state-owned. These would normally be expected to be paid to the Exchequer.

However, one senior source working on the privatisation said of the bonuses: "Compared with electricity privatisation, this is pretty moderate stuff. Some investors are worried the executives haven't been incentivised enough."

Unlike the directors of other privatised companies, the Railtrack executives are not being given any share options. The bonus scheme is structured so that the directors are unlikely to earn more than 40 to 50 per cent of the maximum possible. In this case, they will share between pounds 370,000 and pounds 460,000 a year.

According to one source close to the flotation, private shareholders will be enticed by the promise of a total return on investment of 15 to 20 per cent in the first year because of the extra dividend and other perks.

To maximise their bonuses, the directors have to meet tough performance targets and increase earnings per share - a key measure of financial performance - by at least 12.5 per cent a year.

Railtrack's new pay regime was set up by Archie Norman, the pounds 510,000- a-year chief executive of the Asda supermarkets group and a non-executive director of Railtrack. His own pay packet has come under fire because of a generous option scheme that has already netted him pounds 3m.

The latest move to cut down on passenger information is certain to be raised in the Commons on Wednesday when Labour will initiate a debate on privatisation. The vote is expected to be close. Ms Short said that by leaving out connections that are not intensively used, Railtrack is "undermining services and placing their continuation in doubt." The Opposition is to demand that the cuts be reversed.

Business, pages 2, 3, 7

Comments