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Network rail bosses in new £650,000 bonuses row


Network rail bosses in new £650,000 bonuses row
Network Rail bosses are trying to get new bonuses worth up to £650,000 each, just five months after a public outcry forced them to waive their annual rewards.
Network Rail argues its bosses need to be paid more money Photo: PA By Rowena Mason, Political Correspondent

7:04PM BST 03 Jul 2012

 The taxpayer-backed company is once again at the centre of a political row, after it put forward plans to pay five directors an extra £2.6 million under two new schemes.

Justine Greening, the Transport Secretary, was last night facing calls to block the payments, so soon after the bosses gave up their annual bonuses in February.

Critics pointed out that Network Rail is set to benefit from fares increasing by up to 11 per cent at the same time the company looks set to miss targets on punctuality.

However, the company argues its top staff are likely to resign unless they get more money on top of their six-figure salaries.

Under the proposals, three directors at the company will get payments of £300,000 each in 2014 just for turning up to work for the next two years.The “golden handcuff” payments for Robin Gisby, Patrick Butcher and Simon Kirby are aimed at stopping them defecting to other employers.

Those directors, plus another two executives, Paul Plummer and Peter Henderson, are also set to get long-term bonuses of up to £440,000 each for their work over the last three years.

The company also wants to give a pay rise of three per cent to its executive team.

The row comes after bosses at the rail operator were praised for doing “the right thing” when they agreed give up rewards of more than £300,000 each earlier this year.

Last night they were accused of “obsessing” over their salaries rather than improving performance on the railways.

Maria Eagle, the shadow transport secretary, said the proposed bonuses are surprising given that rail users are facing higher ticket prices.

"Passengers facing annual fare rises of up to 11 per cent will be staggered that our rail industry could be so out of touch and doesn’t recognise how times have changed,” she said. “Passengers expect Network Rail to be focussing on improving train punctuality not obsessing with their already sizeable pay packets. Additional payments on top of salaries should be for exceptional performance, not the rule, and the bonus culture that has existed for too long in too many companies must come to an end.

She said Mrs Greening is “asleep on the job” for failing to block the plan and called for her to “stand up for passengers and protect taxpayers money”.

"It’s clear that the taxpayer funded Network Rail has learnt nothing from the public outcry the last time they attempted to get away with approving massive bonus payments to senior managers,” she said.

The rail regulator yesterday said it was not convinced the company’s pay proposals represent value for money for the taxpayer.

A spokesman for the Department of Transport declined to comment on the bonuses and said the matter was being looked at by the regulator.

The Network Rail bosses gave up their bonuses in February, amid political pressure to restrain high pay-outs at a time of public sector austerity. The directors agreed to put the cash they gave up towards improving safety at the company.

Two months later, the operator was fined £4 million over the Grayrigg rail disaster that killed one person and seriously injured 28 others.

Within the last two years, Network Rail has also been fined £1 million over the deaths of two school girls at a level crossing in 2005 and £3 million over the Potters Bar crash in 2002 that left seven dead.

The company is also under pressure over its punctuality, leaving it in danger of a £42 million fine. It has a target of running 92 per cent of trains on time – or less than ten minutes late.

At the moment, it is only providing 89.2 per cent of services within these limits, risking a £1.5 million fine for each 0.1 per cent below the target.

New "golden hand-cuff" bonuses will have to be approved by the company’s members from the rail industry and the public. The regulator is looking at the long-term incentive plans.

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