Network Rail chiefs bow to pressure and waive bonuses

Network Rail’s six most senior executives have bowed to political pressure and waived their annual bonuses, pledging to invest the money in system safety improvements.

The decision follows a move by transport secretary Justine Greening, who confirmed she would take an unprecedented step for a minister by voting against the bonus package at Network Rail’s AGM on Friday.

However, her vote would not have been binding due to the nature of the governance structure at Network Rail. The government has claimed that it is powerless to curb incentive payments, despite the £4 billion state subsidy that the rail infrastructure company receives each year.

But public pressure has been mounting on Network Rail executives since it emerged that chief executive Sir David Higgins was in line for a bonus of £340,000 on top of his £560,000 salary this year, plus up to £2.8 million in long-term incentives over a five-year period.

Last week, Network Rail pleaded guilty to health and safety breaches which contributed to the deaths of two teenage girls at a level crossing in Essex in 2005.

Under the new bonus scheme being put forward at the annual general meeting – which has also been postponed – Higgins and five other directors would have been eligible for £15.6 million over five years if safety and punctuality targets were hit, as well as annual bonuses.

Higgins said that the executives had decided last week – before the remuneration row broke – to forfeit this year’s bonuses and donate the money to a charitable rail safety fund.

“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,” he said. “I can confirm that remains our intention.”

Greening said that Network Rail had “recognised the strength of public opinion”, and added that she planned to appoint a “special director” to the board to represent the interests of taxpayers.

“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.

“It was also the wrong time to look at this issue, given that I will be shortly unveiling a rail review that will strengthen the corporate governance of Network Rail and see a special director appointed to the board to represent the views of taxpayers.”

The Labour party – which has been vocal in its opposition to bonus proposals at both RBS and Network Rail – also welcomed the move.

Shadow transport secretary Maria Eagle said: “The senior management of the publicly-funded Network Rail have done the right thing.

“At a time when so many families and rail commuters are being squeezed financially, when fares are rising by up to 13 per cent and the rail network is performing inadequately, it was completely wrong for bonuses of this scale to have been even considered, let alone agreed.”