Now rail chiefs surrender bonus
THE CHIEF executive of Network Rail has caved in to political pressure and waived his right to a six-figure bonus.
Sir David Higgins and five other Network Rail directors yesterday decided to “forego any entitlement” to bonuses and will instead offer the proceeds to safety improvements.
The announcement came after transport secretary Justine Greening threatened to exercise her right to vote against the proposed £20m bonus pool at Friday’s annual general meeting, even if her vote was not enough to block the resolution being passed.
Network Rail’s six board members were entitled to receive up to 60 per cent of their annual salary as a bonus this year as well as longer-term bonuses of up to 500 per cent after five years if certain targets were reached.
Sir David was eligible to collect a £336,000 payout in addition to his £560,000 basic salary.
In a statement yesterday, the company said the meeting would be adjourned and its board “will take the opportunity to reflect further on how to incentivise performance in the company”.
Sir David said: “Even if this situation does arise this year, 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 crossings.”
Chairman Rick Haythornthwaite insisted that Friday’s planned meeting was to not to approve a specific annual bonus payment but to amend “a previously approved long term incentive scheme to ensure additional external scrutiny of performance”.
The company – which runs the railway tracks and receives £4bn from the taxpayer each year – has faced criticism over its safety record and poor track conditions.
More than 30 Labour MPs signed a House of Commons motion last week, which cited “major asset failures, congested routes and poor management of track condition” as reasons for “poor performance of the UK rail network in 2011”.
Greening said Sir David’s decision – which comes in the wake of the ongoing row over banker bonuses and executive remuneration – was “sensible and welcome”.
“I have made it clear to Network Rail at every stage that this proposed package did not go far enough in reflecting the need for restraint,” she said.
Institute of Directors boss Simon Walker said the decision marked “a good day for owner activism” and called on the coalition to revisit Network Rail’s governance structure.