Rail bosses ‘haven’t earned these 60% bonuses’

The issue is set to be raised at a meeting on Thursday of NR’s 95 public members amid a pledge by Deputy Prime Minister Nick Clegg to balance austerity in the public sector with a crackdown on “abhorrent” top corporate pay.

New NR chief executive Sir David Higgins stopped bonuses for 2010 while the system was investigated, but a new scheme is being planned which critics say would allow executives to be paid 60% on top of their salaries

Lord Berkeley, a public member of NR, said in a letter that executives should renounce any bonuses this year.

He dismissed the argument large bonuses should be paid to attract good managers pointing out that NR is effectively a public monopoly which can never go bust.

“NR’s position, as a company which cannot effectively go into liquidation and in which executives can therefore expect a greater degree of job security, does not appear to be recognised by the Remuneration Committee (which sets the bonuses) which also argues the need for higher salaries and bonuses to attract the right calibre of people.

“Whilst having severe doubts that NR’s performance will justify any bonuses for this year, there is also the question of public perception. The High Pay Commission has recently published a report warning that large pay deals were ‘corrosive’ to the economy.

“This was followed by a statement from the Institute of Directors attacking ‘unsustainable’ rises in boardroom pay. Both these comments refer to large public sector companies, although it seems that the Remuneration Committee still believes that NR should emulate them, even though Network Rail’s status in terms of risk and government funding is very different.

“Surely the Committee should not only take into account these two reports, but also reflect the lower risk of working for NR compared with a plc?

“Finally, I repeat my suggestion which I made at the October members’ meeting that NR executives should renounce any bonus entitlement for this year in view of the economic situation. Things have got worse on many fronts in the last two months.”

Manuel Cortes, leader of the Transport Salaried Staffs Association, said the union had campaigned long and hard against a £600,000 bonus given to former chief executive Iain Coucher, who left last year, describing it as “daylight robbery of the taxpayer.”

He added: “We think 60% bonuses are still way too high in what is effectively a public sector company but the reality is a pay stampede started in boardrooms when the Tories privatised the industry 16 years ago.”