Rail chiefs in bonus controversy

Senior bosses at Network Rail are likely to trouser hundreds of thousands of pounds in bonuses for last year, in spite of a drop in company profits and the description of its performance as "mediocre" by the regulator. The latest bonus controversy comes as the group announced a full-year pre-tax profit of £1.52bn, lower than the previous year's £1.59bn.

After-tax earnings fared even worse, almost halving to £609m from £1.2bn. Its profits are regulated by the Office of Rail Regulation and are used to upgrade the rail way network. The company's debt rose by 13 per cent and its pension fund deficit leapt to 33 per cent from 17 per cent.

The operator did say that punctuality numbers hit a record high, with 90.6 per cent of trains arriving on time last year, the best performance in 17 years of data collection.

And the figures may go some way to explaining the bonuses which are believed to have been agreed for senior Network Rail chiefs. However they still run counter to Government guidance.

Chief executive Iain Coucher has agreed to give up his annual bonus of £300,000 this year, but will still receive his long-term performance bonus of £200,000. Last year he took home a bonus of £500,000, out of a total of £55m paid out to executives.

The regulator entered the fray, saying that the company had failed to meet all its performance targets, including those related to cost-cutting and rail-related deaths.

The decision on the bonuses is sure to infuriate figures in Government and the unions, who have pressed for more realistic pay-outs to be offered to senior corporate executives.

WHAT THEY ARE SAYING
Robert Wright, FT: "Confirmation that the efficiency target was missed will put further pressure on the company's remuneration committee to cut directors' annual bonuses. However, much of the heat has been taken out of that issue by Mr Coucher's decision last month to refuse any bonus for the past year."Norman Baker, the Liberal Democrat transport spokesman, in the Daily Telegraph: "Bonuses should be paid for exceptional performance, they are not an automatic enhancement of salary. Network Rail bosses should not take excessive bonuses, that is not what the system is intended to do."
 ·