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The chief executive of Network Rail has received a record bonus of more than half a million pounds only weeks after the company was fined £14 million for causing chaos on the railways over Christmas with overrunning engineering works.
The revelation will anger passenger groups and trade unions, who question why a company with no competitors or shareholders should pay such large bonuses.
Iain Coucher has been paid an annual bonus of £306,000 and an additional bonus of £205,000 under the company’s long-term incentive plan. With his salary of £585,000, his total pay this year will exceed £1million despite missing targets for punctuality and financial efficiency.
Peter Henderson, the infrastructure director, was paid a £219,000 annual bonus and Ron Henderson, the finance director, received £209,000. They also received additional long-term bonuses of £153,000 each.
The total amount paid in bonuses to the three executive directors exceeds £1.2million, double the £648,000 paid last year and the highest amount ever awarded by the company.
Network Rail appeared to ignore the advice of the rail regulator, which wrote to the company’s remuneration committee last month advising it to take into account various failures when setting the bonuses.
Network Rail carefully timed the publication of the bonuses to come a few hours after it announced its annual results showing a paper profit of £1.2 billion.
Speaking to The Times, Mr Coucher said his annual bonus had been cut by £50,000, or 14 per cent, because of the company’s Christmas engineering overruns at Rugby, London Liverpool Street and Glasgow.
He rejected a suggestion that he should have followed the example Willie Walsh, the chief executive of British Airways, who declined his bonus last month because of the problems surrounding the opening of Heathrow’s terminal 5.
“Mr Walsh took his judgment personally. We run a very different operation to BA. It opened one big project. We do that sort of thing every weekend.
“Every year we do 5,000 projects and we completed 4,950 successfully.
“I would simply ask people to look at our record. We have a railway that is safer than ever before. We have saved taxpayers and farepayers billions of pounds over the last few years by running the railway better.”
Mr Coucher said the 30 most senior managers would all have their bonuses cut by 14 per cent to reflect the company’s regret over the disruption caused at Christmas.
Network Rail’s 33,000 maintenance workers and signallers will receive a bonus of £871 each.
Network Rail failed to achieve its target for reducing delays caused by infrastructure failures last year. It had aimed to reduce train delays by 1.4million minutes, but overshot that target by 400,000 minutes.
Bill Emery, chief executive of the Office of Rail Regulation, wrote to Jim Cornell, chairman of Network Rail’s remuneration committee, on May 9 to draw his attention to the company's failures.
Mr Emery’s letter said Network Rail had fallen "well behind target" on delays due to infrastructure on two of Britain's busiest lines: the East Coast and Great Western.
On its target for reducing the cost of track replacement, he said the company had "unwound almost half of the gains achieved in earlier years".
He also said there were "systematic errors" in the way Network Rail assessed its own efficiency, suggesting the company was underestimating the extent of its failures.
On asset stewardship, a key measure for calculating the bonus, the letter said: "Though-out 2007/08 we have challenged Network Rail about the overall level of asset failures causing delay to services."
Mr Emery also drew Mr Cornell's attention to safety failures, including evidence uncovered during ORR's investigation into the fatal crash Grayrigg last year. He said ORR had been obliged to take enforcement action to make Network Rail improve track patrolling.
The letter also raised concerns over Network Rail's treatment of contractors and the slow progress of its programme to enhance the network.
Mr Emery wrote: "Throughout the year, we have had a number of complaints from those wishing to invest in the railway that they find it difficult doing business with Network Rail and that it takes far too long to progress and deliver small scale enhancement schemes."
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It would seem the rich poor is divide is increasing by the day in the UK as these executives are the rule rather than the exception.
B Redfern, Krsko, Slovenia
Just watching the News report that states that Network Rail cannot operate lucrative share option schemes etc etc because of its nationalised status....but they have to pay huge bonuses to attract top quality management.....fair enough.....when are they going to start work ??
Bob Fanton, Fordingbridge, UK
How exactly did the company make a 'profit' of £1.5Bn? It gets nearly all of its money from the Govt to make the railways better and safer! It then 'saves' this money and says it makes a 'profit'! So we're left with rubbish servies (London Midland commuter) and the top cats gets bonus. Eh?
N, Harrow, UK
When he suggests ...We have saved taxpayers and farepayers billions of pounds over the last few years by running the railway better.
Hes actually refering to the maintenance of it all......
Hes not talking about cheaper tickets etc I think people get confused as to what NETWORK RAIL do try website
John, bristol,
"We have saved taxpayers and farepayers billions of pounds over the last few years by running the railway better."
I could not laugh harder if I tried, not just greedy but also big headed!
Adam, Bristol,
This reflects the obvious error common to many companies of setting bonuses based on internal efficiency metrics, and short-term profit and dividends, and not on long term value where customer service, customer retention etc then becomes a vital metric. Couple that with a monopoly position!!!
Paul Freeman, London, England
They follow the MP's £23000 rise request for putting the country in a poor state. They see no harm in giving money for inefficiency. They control the nationalised railway so one cannot expect anything different. The whole question these days seems to be based on poor work by top people. DISCUSSING
Alan Dutton, Wordsley, England
Surely if he were not so amply rewarded he might go abroad and take his wealth creation skills elsewhere mismanaging another country's public infrastructure.
Paul, Coventry,
These hopeless people live in a different world from the rest of us. How can an organisation so grossly inept in its daily outcomes give anyone a bonus?
Colin, shrewsbury,
June 10th 2010..Bye , Bye NuLab.
Martin, Aberdeen, Scotland
The bulk of that 10% not on time must be on the London Midland service. I had six trains cancelled on me in the space of two weeks, and no end of others running late. As of this month I'm going back to car transport. It's more reliable and cheaper.
Tony, London,
Is anyone really surprised by this? In Brownland everyone gets a reward no matter what the consumer thinks of the service.
clive hogan, surrey,
The railways in Britain have become the laughing stock of the world and this just confirms it.
Gareth Williams, Powys,
Just who is on the remuneration committees of corporations giving such generous packages to boardroom directors?
People who take no risk and run an organisation that has no competition or produces the usual "shareholder value" should receive normal management pay packages. Something has to change.
peter fieldman, paris , france
What a complete joke. I have the misfortune of using One/National Express into Liverpool st and had to travel over Xmas when the engineering work overran. Network rail were heavily fined and reprimanded yet his joker gets a 500k bonus. I work in the City and on this performance I would get the sack....
Mark Wetherall, Chelmsford , England
Yet another example of 'failure' being rewarded instead of achievement !
Baz, Liverpool, England
Whats the keyboard equivalent of someones jaw dropping in disbelief?
ronnie, Bucks, UK
Gordon Brown is the modern day Robing Hood. Take from the poor and give to the rich.
The rich are getting richer and the poor are getting taxed to death.
Are the fat cats of this country are not doing their jobs well but still get their high salaries and big bonuses.
Why not tax the rich more??
Michael, Bracknell,
When you operate a monopoly you can just do what you want.
RB, Lauzun, France
Yet more evidence of the 'rewards for failure' culture that exists in Britain's boardroom.. Why is this government so keen to clamp down on people at the bottom of the ladder but haven't uttered a word about obscenities like this?
Owen, London, UK
This is now our publically owned, nationalised Railway infrastructure company isn't it? So this is what our public servants are being paid? This is after record fines, massive disruption at Christmas and if I am right huge overspend..on projects..? Is this why my taxes are so high?
Phil A, Headley Down, UK
However one looks at this financial deception the bonuses are all undeserved and should be withheld. Strike action by the traveling public and by the staff of NR should be put in place immediately, as should written protests to Government by consumers and involved organizations.
walter coleshill, Pittsboro, N.C., USA
Double standards on which our society rests as a whole cannot last for much longer. An ordinary worker with such level of underperformance in his own department would be sacked.
Mr Coucher is in it jus t for himself. Is he to blame?
No. He just does as all CEO's are doing.
michael, london,
I'm willing to bet that not one of the three top-paid executives actually USED the train system at any point in the year. Maybe if they had to wait for hours for delayed trains on freezing platforms and pee in the disgusting train loos they'd have second thoughts about how great their company is.
Stephanie, Bristol,
I would simply ask people to look at our record...We have saved taxpayers and farepayers billions of pounds over the last few years by running the railway better. Hah. My experience was always expensive and shoddy. I travel by coach now. Cheaper, reliable, slightly longer journey, less stress.
Tess, London,