Storm of protest at bonuses for rail directors

Last month, Mr Hammond wrote to Network Rail (NR) urging restraint and pointing out the company's top management already enjoyed "handsome" annual salaries.

But yesterday, NR said its top directors were getting bonuses totalling more than 2.25m, including 641,000 for chief executive Iain Coucher whose annual salary is 613,000.

NR chairman Rick Haythornthwaite said the bonuses "had been earned" but Mr Hammond said he was "very disappointed that NR executives have accepted bonuses of this scale in the current climate".

Rail unions joined in the condemnation, RMT leader Bob Crow branding Mr Coucher's pay-out "a national scandal" and TSSA union general secretary Gerry Doherty saying Mr Coucher had "got away with daylight robbery".

There was also criticism from the Office of Rail Regulation (ORR) whose chief executive Bill Emery branded NR's performance for 2009-10 "mixed" and also wrote to NR warning about the level of bonuses.

The ORR said it was now up to NR's remuneration committee – which had decided on the bonuses – to "fully justify how it has reached its decisions".

The performance-related pay-outs comprised an annual bonus as well as an award under a three-year rolling management incentive plan.

NR did say that the 2009-10 incentive bonus had been cut by 20 per cent, that directors' salaries would be frozen and that next year's incentive scheme would be suspended while the remuneration committee looked into its "future sustainability".

Mr Hammond said yesterday: "NR is of course a private company, but one that is dependant on taxpayer funding, so I am very disappointed that NR executives have accepted bonuses of this scale in the current climate.

"In the week when everyone has been asked to share the burden of reducing Britain's deficit, people will rightly be asking how NR's top executives feel this is appropriate."

Mr Haythornthwaite said: "Network Rail only rewards for success. This is measured against what matters most to passengers – a better railway with more trains on time.

"On that basis, awards for the past year have been earned, are a contractual right."

Mr Crow said: "While hundreds of maintenance staff face the prospect of being thrown on the dole, it is nothing short of a scandal that Iain Coucher is walking out of the door with a golden handshake bonus of nearly two-thirds of a million pounds."

Mr Doherty said: "These bonus payments amount to a fraud against passengers.

"This company does not own or run a single train and yet these payments are based on improved punctuality times. They are paying themselves for something they have not done."