The chief executive of Railtrack Group is set to receive a £150,000 bonus for selling off its assets and helping put the collapsed network operator into liquidation.
News of the bonus payment for David Harding came as Railtrack Group announced that compensation for shareholders would be slightly higher than originally forecast.
Railtrack had initially expected to return between 245p and 255p a share or about £1.32bn to investors but it now expects the proceeds to reach between 252p and 260p a share or around £1.35bn.
The group also said that it now expected the first cash instalment, due to be paid next January, to be in the range of 200p to 220p compared with an initial estimate of 160p to 180p.
Geoffrey Howe, Railtrack Group's chairman, defended the bonus payment to Mr Harding on the grounds that he had succeeded in maximising the value of the group's assets and minimising its liabilities.
Mr Harding, whose salary increased to £300,000 in July, is eligible for a bonus of up to 50 per cent, payable next March. Railtrack Group's legal director, Simon Osborne, is also in line for a 50 per cent bonus worth £107,500 on top of his £215,000-a-year salary.
Railtrack expects to complete the £500m sale of Railtrack plc, the owner of the national rail infrastructure, to Network Rail, the Government's not-for profit successor body, early next month. The £375m sale of its interest in the Channel Tunnel Rail Link to London and Continental Railways will be completed at the same time.
Railtrack's 250,000 shareholders will then vote to place the company into a solvent liquidation at an extraordinary meeting on 18 October. This will ensure that the payouts to shareholders will be free of tax. The shares, which closed at 247p last night, will remain listed until 27 December.
Mr Harding said the higher payout was possible because of the progress Railtrack Group had made in disposing of surplus property and capping its liabilities.
The liquidators of the group will keep about £5m back to cover any unexpected claims against the company once the compensation payments have been made to shareholders.
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