Network Rail chiefs turn down bonuses

Monday, 06 February 2012 07:06

Senior staff at Network Rail including its chief executive Sir David Higgins have announced that they will not acdept bonuses this year.

The announcement comes after the Labour party sparked a political row by saying that Secretary of State for transport, Justine Greening could stop the bonus payments.

Instead the money will be donated to a charity for rail safety.

Sir David Higgins said: "I and my directors decided last week that we would forego any entitlement and instead allocate the money to the safety improvement fund for level crossing."

Network Rail has also postponed its AGM, set for Friday at which bonus and remuneration packages for senior staff were to be discussed.

In a statement Network Rail said that it "will take the opportunity to reflect further on how to incentivise performance in the company against the backdrop of the current context". 

Network Rail owns most of the rail network infrastructure in the UK and was set up by the Labour government in 2002 to replace Network Rail.

It has been reported that Network Rail chief executive Sir David Higgins is likely to receive a £340,000 bonus this year despite the company not meeting all of its performance targets and being criticized for late trains, over-congested routes and poor track management.

The company has also admitted breaches of health and safety legislation following the death of two teenagers who were killed at a level crossing in Essex.

Network Rail plans to change its remuneration policies so that annual bonuses cannot exceed 60 per cent of annual salary but long term incentives that allow bonuses of up to 500 per cent of annual salary can be paid after five years. Network Rail says that it has not yet decided on bonus details this year.

Labour says that government ministers have to provide written approval to any changes in the rules. However, Justine Greening, the transport secretary said that she will attend Network Rail’s AGM on Friday and vote against the bonus payment to Sir David Higgins, but that her vote will be just one out of 80 and would not be binding.

The government says that a change in the bonus policy does not need to be agreed by ministers but that a change in the incentive policy does.

However, Shadow Transport Secretary Maria Eagle said that she has found out from the Department for Transport (DfT) that written approval is needed from the DfT to agree bonus payments from Network Rail and that Justine Greening as secretary of state can sit on the five-person remuneration committee.

Ms Eagle said that the fact that Network Rail is proposing a new bonus package knowing that it needed government approval suggests that it has already been checked with government ministers and that written permission may have already been given.

Ms Eagle said: "It is misleading of the DfT to suggest it is just one vote out of more than 100 when it is in fact one of five people on Network Rail's remuneration committee and the only one providing £4bn of funding to the industry. Being critical is no longer enough.

"Times have changed and failing to use the powers that ministers have will show just how out of touch they are with public opinion when we are supposed to all be in this together."

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