Network Rail chief executive to turn down bonus. (BBC News 06/02/2012)

[whole diary]

[JayMac]

From the BBC^» (British Broadcasting Corporation - home page):

Network Rail bosses, including chief executive Sir David Higgins, have said they will not accept bonuses this year.

They had come under growing political pressure to waive the potential six-figure awards.

The government said it opposed the bonuses but did not have the power to block the awards.

Sir David, who was eligible for a bonus of up to ^340,000, said in a statement that they would be donating the money to a rail safety charity.

He said he took the decision before the row over remuneration broke out.

"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 crossing," he said.

"I can confirm that remains our intention."

Labour had said the bonuses could not be "justified" in the current financial climate and the firm's performance did not merit it.

'Reflect further'

Network Rail has also postponed a meeting on Friday at which the bonuses were set to be criticised and at which Transport Secretary Justine Greening had said she would vote against the bonus plan.

In a statement, Network Rail, which owns most of Britain's rail network infrastructure, said its board "will take the opportunity to reflect further on how to incentivise performance in the company against the backdrop of the current context".

Sir David and six other directors had been eligible to receive up to 60% of their annual salaries in one-off performance-related bonuses. The firm insisted no decision had yet been made but came under sustained pressure to curb the payments.

Before the decision was announced on Monday, Labour leader Ed Miliband appealed for a "culture of responsibility" at the firm and said ministers should have intervened earlier to stop bonuses on such a scale.

Ms Greening made it clear she opposed the bonuses but insisted she did not have the power to block them under the terms of Network Rail's governing arrangements - something Labour disputed.

Taxpayer support

No 10 said ministers were not permitted to interfere in the "day-to-day running" of the firm - which receives ^4bn of taxpayer funding a year and is guaranteed by the government.

But it said it would be looking at the firm's corporate governance in light of "problems" that had arisen.

The growing political attention on the proposed Network Rail bonuses followed the row over bonuses at the majority taxpayer-owned Royal Bank of Scotland.

RBS chief executive Stephen Hester turned down a ^963,000 bonus last week following a political outcry.

Employer groups have expressed concern that anger over executive remuneration may create a climate of "anti-business hysteria" and dissuade firms from investing in the UK^▸ (United Kingdom).

[grahame]

Sir David, who was eligible for a bonus of up to ^340,000, said in a statement that they would be donating the money to a rail safety charity.

The total bonuses are around 2 million, I think I saw someone say?

I'm interested by the "rail safety charity" reference. Can anyone enlighten me / provide me with examples of what that might be.  Rail and safety and charity are each great words, but (and I may be being thick) I'm not sure I see how they combine. 

[devon_metro]

Presumably a charity that promotes safety on the railways, maybe through school visits etc.?

[JayMac]

Whatever this rail safety charity is, it doesn't appear to have an online presence.

[Chris from Nailsea]

From the Network Rail press release today:

NETWORK RAIL ADJOURNS MEMBERS' MEETING

The board of Network Rail has decided to recommend to its members that this Friday's meeting be adjourned. The board will take the opportunity to reflect further on how to incentivise performance in the company against the backdrop of the current context. It will continue to consult the Secretary of State on wider issues of governance in advance of the government's command paper.

Chairman, Rick Haythornthwaite, said: "Friday's meeting was not to approve a specific annual bonus payment for Executive Directors, but rather to amend a previously approved long term incentive scheme to ensure additional external scrutiny of performance.

"The issue of annual performance payments would only arise if Network Rail surpassed stretching performance thresholds and would only be decided in May after the end of the financial year.

Chief executive, David Higgins, 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. I can confirm that remains our intention."

The Secretary of State was informed of the decision to recommend adjournment this morning.

(My highlighting).  Chris.  

[JayMac]

So not a charity then? 

[Chris from Nailsea]

Hmm. 

The BBC^» (British Broadcasting Corporation - home page) seem to have interpreted it as a 'charity' - despite also quoting the original statement by Sir David Higgins verbatim from the Network Rail press release.

[grahame]

Certainly not going to charity by the looks of things.

I'll admit to feeling rather put out by the suggestion that rail safety should be something that require the action / inputs of a charity - I felt (and feel) that all necessary steps for rail safety should be the direct responsibility of Network Rail and the train operators.

But I'm not sure how much happier I am that the directors of Network Rail are magnimously reassigining money that would have been their bonuses to a safety budget which - surely - should be properly funded in the first place.  The whole thing rather smacks of "if we use words like safety and charity, people won't ask too many questions"

[Tim]

I think that part of the issue was that the bonuses were for a year in which there had been a fatal breach of NR^» (Network Rail - home page)'s level crossing safety obligations. 

It is normal practice in many industries for the bosses to forgo bonuses if there has been a fatal workforce accident or a serious breach of H&S^▸ (Health and Safety).  Although in many companies that is written into the rules of the bonus scheme as it shoudl be with NR.

[inspector_blakey]

Damned if they do and damned if they don't, perhaps...? No doubt they'd be taking heat were they to accept the bonuses, but we seem to be criticizing them here for foregoing them!

[grahame]

Damned if they do and damned if they don't, perhaps...? No doubt they'd be taking heat were they to accept the bonuses, but we seem to be criticizing them here for foregoing them!

That's fair comment. I think that the idea of what looks like a PR^▸ (Public Relations) exercise to score brownie points from it made me a bit negative.  And the idea that safety was something that wasn't a core of the business, but rather was supplied though charitable stuff, didn't help.

[inspector_blakey]

In fairness I think the main part of that perception arises from the Beeb's misinterpretation that the level crossing safety fund is a separate charity rather than part of NR^» (Network Rail - home page).

I would guess that the level crossing safety fund is perfectly adequately resourced and budgeted for, but the additional money should the directors forego their bonuses would be a very useful fillip and enable it to do more.

[Chris from Nailsea]

No, to be fair, Network Rail never used the word charity.

Details of their ^346m safety improvement fund for level crossings are given on page 13 in this Network Rail document.

CfN 

[BandHcommuter]

The charity reference is clearly an error. However, I am still left with the rather disconcerting impression that there is a trade off between investment in level crossing safety and the payment of directors' bonuses.

[Electric train]

No, to be fair, Network Rail never used the word charity.CfN 

I agree the word charity was never uttered by the NR^» (Network Rail - home page) Exec

Details of their ^346m safety improvement fund for level crossings are given on page 13 in this Network Rail document.

CfN 

Would like to see a comparable document relating to road transport, to see the levels of harm to the public and to staff