Network Rail bonuses, Iain Coucher's resignation and related posts

[whole diary]

[Chris from Nailsea]

From the Sunday Times:

Nearly 200 public sector ^fat cats^ are earning more than Gordon Brown, according to a new rich list published today.

The public sector rich list has been drawn up by the Taxpayers^ Alliance, a pressure group. It is likely to grow even more next year. While some of Britain^s biggest companies are announcing redundancies, an extra 50,000 public sector officials will have been recruited in the six months to the end of the year.

Topping the new table is Iain Coucher, chief executive of Network Rail, who saw his total remuneration rise by 51% to ^1.24m from ^823,000 last year. This includes an annual bonus of ^306,000, a longer-term incentive payment of ^205,000, a pension contribution of ^169,000 and benefits of ^25,000, including life insurance cover.

Coucher gets the shared use of a chauffeur-driven Lexus hybrid car to help to travel between his flat in Marylebone, central London, and the Northamptonshire farmhouse where he lives with his wife Tanya and their children. He owns a silver Aston Martin DB9, capable of doing 165 miles an hour, but he misses out on free train travel because he joined the railways after British Rail was broken up.

Network Rail insisted last week that it should be regarded as a private company, even though it is funded largely by the government. The taxpayer also had to pick up the bill when it was fined ^14m by the Office of Rail Regulation for the disruption to services caused by overruns in engineering works last Christmas and new year.

Gerry Doherty, general secretary of the Transport Salaried Staffs^ Association, which has 30,000 members, said: ^Why should taxpayers fork out such amounts for failure?^

See http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article5213462.ece

[Shazz]

But they do something a lot more useful than Gordon Brown

[eightf48544]

But they do something a lot more useful than Gordon Brown

Maybe, but is it really ^1.2 million worth when as is said Networkrail was fined ^14 million for not doing it's job properly.

I think pay of that magnitude, which is more than most of us now retired folk will have earnt in our working lives, makes people think they are invincable and can do no wrong. After all if you prudent you only have to work a few years and retire on your savings and pension pot. Might it in fact be a disincentive to doing the job really well because you know you have enough put by for a rainy day?

Just think of the huge mistakes the bankers managed to make in search of their extravagent bonuses.

If Networkrail can deliver the Cotswold and Reading upgrades on time and to, or preferably below budget, the savings  to be used for further upgardes such as Swindon Kemble, then perhaps all Networkrail staff  might just deserve a bonus. 

But one thing that is ridiculous, in the whole sage is that as head of Infrastructure he doesn't get a Gold Medallion. If there is one person that ought to be travelling everywhere by train it's the head of Networkrail! It would be one way of finding out what's going on  the railways. As Tom Peters calls it MBWA "management by walking about" or in this case MBTBT or "management by travelling by train". I think I posted elsewhere that most of the signalmen at Liverpool Street IECC^▸ (Integrated Electronic Control Centre) drive to work, how can you be a signalman if you don't travel by the trains you signal.

Of course I know the answer they are now signallers not signalmen.  I thought that signaller  was a military rank. You see them standing  at the back of the bridge in  war films saying "Aye Aye Sir" at appropriate times.

[Btline]

But they do something a lot more useful than Gordon Brown

I would disagree. I like Gordon Brown.

[Chris from Nailsea]

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

Network Rail's chief executive is to give up his annual bonus for this year, saying he does not want it to cloud discussion of the firm's performance.

But other members of the Network Rail executive committee are still being considered for payments which could total hundreds of thousands of pounds.

And Iain Coucher will still be paid for the company's long-term performance.

Network Rail insists it has hugely improved the railways and executives should be rewarded for the achievement.

For the video news report, see http://news.bbc.co.uk/1/hi/business/8049226.stm

[Chris from Nailsea]

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

Rail bosses get ^1.2m in bonuses

Top Network Rail bosses will get bonuses totalling over ^1.2m, despite criticism of the firm's performance.

Chief executive Ian Coucher will get more than ^150,000 in incentive payments for the performance of his company over the last three years.

Directors Peter Henderson and Ron Henderson will each get more than ^300,000.

The Office of Rail Regulation said it was "surprised and disappointed" at the decision to award large bonuses.

There were also accusations - strongly denied by Network Rail - that the company had attempted to "bury bad news" on the day Michael Jackson's death dominated news coverage.

[Chris from Nailsea]

From the Daily Mail:

Network Rail chiefs are on a collision course with the government after indicating they will defy transport secretary Philip Hammond by paying out generous bonuses to staff and senior management.
The rail infrastructure operator is due to announce its staff bonuses at the end of the month, when its top brass could earn many hundreds of thousands of pounds on top of their already inflated salaries.
Last year, Network Rail chief Iain Coucher waived his ^300,000 annual bonus, but three colleagues banked a combined total of ^800,000.
However, Coucher still received ^150,000 as part of a three-year rolling management incentive scheme. This was on top of his ^650,000 salary.
Coucher said: 'We always believe that bonus schemes drive the right behaviours and the railway has today seen the benefit of that.'
He acknowledged any rewards would need to be for 'exceptional performance' and said it would take account of the views of stakeholders, such as the government and Office of Rail Regulation.
The ORR^» (Office of Rail and Road formerly Office of Rail Regulation - about) this week warned Network Rail's remuneration committee to 'exercise considerable discretion' with bonus payments, while Hammond wrote to the infrastructure group's chairman
Rick Haythornthwaite urging him to be 'sensitive' to how taxpayerfunded bonuses will be viewed at a time when the government is embarking on severe public spending cuts.
Hammond said that although Network Rail is legally a private company, it is also one that 'depends on taxpayers' money and has all its debts guaranteed by government. Asked whether he was paving the way to pay bonuses, Coucher said: 'It seems harsh to say to them (staff), "Even though you have achieved everything we have asked you to, we are going to take away your bonus".'
He was speaking as Network Rail reported a 75 per cent fall in annual pretax profit to ^395million, which reflected a regulatory ruling forcing it to reduce track charges to train companies by 7 per cent.
It was also hit by higher staff costs and higher debt interest costs, as its borrowings rose to ^23.8bn from ^22.3bn to help fund its investment programme.
The company also said train punctuality rose 1 percentage point to 91.5 per cent in the year - ahead of its 91pc target.
Punctuality has risen from an appalling 78.6 per cent since it took over from the failed Railtrack in 2002.
Network Rail said its focus on controlling costs meant the average cost of running a train one mile had fallen by 25p in the last year, and was now ^3 less than in 2004.

[eightf48544]

Can anyone explain how Network rail made a ^395 million profit?

Presumably that's ^375 m not invested in the railways

[Tim]

Presumably that's ^375 m not invested in the railways

No, I think profit is reinvested in the railway.  But the whole notion of profit of NR^» (Network Rail - home page) is wonky and I'm note sure what it really means.  The only important financial figure is surely the debt (if ^375 was the debt reduction figure for the year, i would be pleased), all other numbers are contrived as I see it. 

[Electric train]

The rules on where the profit is derived from is agreed with ORR^» (Office of Rail and Road formerly Office of Rail Regulation - about).  The profit is returned back into the railway network and not given away as dividends to share holders or as bubbly and nibbles at the share holders meeting.

As for the bonus, huge I think not, the shared bonus scheme which most employees are paid from is ^950 this year (before tax)

[Tim]

No problem with staff on the ground in all weathers getting ^950, but a bonus for the managers in a year when debt has increased, the ORR^» (Office of Rail and Road formerly Office of Rail Regulation - about) has had a go at NR^» (Network Rail - home page) and track workers have died seems wrong to me.

 

[Electric train]

No problem with staff on the ground in all weathers getting ^950, but a bonus for the managers in a year when debt has increased, the ORR^» (Office of Rail and Road formerly Office of Rail Regulation - about) has had a go at NR^» (Network Rail - home page) and track workers have died seems wrong to me.

In a statement by Iain Coucher - NR is a large organisation employing tens of thousands of people directly and many more contractors, NR's annual expenditure is B^4 (when you consider the Olympics total cost of B^8) is a safety critical organisation it is vital that the right incentives are there to attract the right people, the remuneration packages are regularly bench marked to ensure they are at the right level.

[John R]

It strikes me someone can always come up with a good reason why the NR^» (Network Rail - home page) Chiefs shouldn't have a bonus if they are so minded. The reality is that we have record punctuality, and no passenger fatalities for 3 1/4 years.

[willc]

On the other hand, thousands of people were badly delayed yesterday morning in FGW^▸ (First Great Western) land by yet another power failure killing the signal system around Didcot. Not too many of them are likely to think Mr Coucher is worth a bonus, especially when he gets rather more than the Prime Minister in basic pay, never mind bonuses.

[Electric train]

On the other hand, thousands of people were badly delayed yesterday morning in FGW^▸ (First Great Western) land by yet another power failure killing the signal system around Didcot. Not too many of them are likely to think Mr Coucher is worth a bonus, especially when he gets rather more than the Prime Minister in basic pay, never mind bonuses.

Not so much Coucher overpaid may be we underpay Prime Ministers.
I don't suppose the NR^» (Network Rail - home page) staff sorting out the power failure are particularly amused at the pay award this year and the reorg going on.