Posted 2nd May 2014 | 2 Comments

Network Rail 'mega-bonuses' are scrapped

 NETWORK RAIL directors will no longer be able to scoop up huge bonuses, if a newly proposed scheme is confirmed.

The awards of many hundreds of thousands of pounds to senior managers who are already receiving six-figure salaries has often been bitterly criticised by politicians and unions. The change of heart has come only a few months before the national rail infrastructure manager moves wholly into the public sector. It becomes a government body at the start of September.

Network Rail said the scheme would see bonuses 'significantly reduced' from the current total 'bonus opportunity' of 160 per cent of salary each year to a maximum of 20 per cent.

The ORR does require NR to have an incentive scheme, but under the new arrangements bonuses will only be awarded 'if demanding targets are beaten'.

In addition, awards will be deferred for three years to allow the company's independent remuneration committee to satisfy itself that lasting performance was achieved.

The new chief executive Mark Carne said: "No other company can offer its people the sense of satisfaction and pride that comes from delivering a public service, which is so critical to the country’s infrastructure and economy. This is our unique selling point and why I'm confident that we will continue to retain and attract the best people.

“My team and I have a huge responsibility to deliver a £38 billion programme over the next five years. We are up for the challenge and will make the tough decisions required to drive continued improvement through the business for the benefit of rail users and taxpayers."

Network Rail chairman Richard Parry-Jones will now preside over a members' vote on the proposals at the company's next Annual General Meeting in July.

He said: "We believe that at the start of a new five year programme, the time is right to reconsider the bonus structure for our executive directors. The potential to earn large bonuses is no longer sustainable in the environment in which this company operates. The executive directors and the Board both recognise this and have responded by putting forward this radical new bonus proposal that sees directors bonuses massively reduced.

"We do understand that this will move our remuneration for executive directors further down against comparable benchmarks. However, we are confident that the unique challenge of having the executive responsibility to decide how to most effectively run Britain’s railway infrastructure is a huge motivation in itself for the kind of leaders that we need."

Labour's shadow transport secretary Mary Creagh said: "We welcome the end of Network Rail's mega-bonuses. Most hardworking people struggling with the cost-of-living crisis receive no bonus for doing their jobs, let alone one that more than doubles their salaries."

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Roshan, Leeds

    For a while this has been one of the main complaints of people about the industry, along with the pay of rail drivers. Hopefully they will sort that out now that this has happened.

  • Lutz, London

    This is justified based o their failure to deliver the cost savings and performance improvements in the last CP. However, going forward realistic bonuses will have to be re-introduced prior to the sell-off of Network Rail.

    (For the avoidance of doubt I should point out that there are no published proposals to sell Network Rail, which becomes a government body in September.--Editor.)