Bonus for Network Rail bosses despite operating losses

Network Rail bosses have been awarded 24% of their basic salary in bonuses, despite the company posting annual operating losses of £758 million in its preliminary annual results.

Publishing its report for the year to 31 March 2004, the company said that it had begun to take "the first substantial steps towards the delivery of the safe, reliable and efficient rail infrastructure the country wishes to see".

Net debt stood at £12.6 billion, some £1.3 billion lower than forecast in October 2002. Operating loss topped £758 million, compared to last year’s operating profit of £80 million. Of this nearly three-quarters (£544 million) was attributable to a change in the phasing of network grant income from the Strategic Rail Authority, the company said.

However, a bonus for employees was granted – as set out in last years report. The annual bonus for 2003-04 was calculated by measuring actual company performance against targets set in the Management Incentive Plan (MIP) for 2003-04.

The total potential bonus was 32% - but the committee chose to "use their discretion" by reducing the overall bonus award for the executive directors to 24% of their basic salary.

Network Rail Chairman Ian McAllister said that the company had "achieved a great deal in the last 12 months", so it was "only right" that all Network Rail employees receive a bonus this year.

The report also revealed that workforce fatalities had increased from four in 2002-03, to eight in 2003-04.

"Any fatality is unacceptable and we will continue to work to eliminate fatal incidents on our infrastructure," Mr McAllister said.

The financial and performance highlights for the year, compared to the previous 12 months, included: a 7% reduction in Network Rail delay minutes, down to 13.7m minutes from 14.7m minutes last year; broken rails reduced to 334 compared to 444 last year – the lowest level ever recorded; 1,373km of new rail laid, compared to 1,010km; 380 units of switches and crossings renewed, compared to 254.

The complete installation of the Train Protection & Warning System (TPWS) and "substantial progress" on the transfer in-house of rail maintenance were also highpoints outlined in the report.

The chairman added that Network Rail was undergoing "huge change, at an incredible pace".

"Over the next five years, Network Rail’s dedicated and highly skilled employees will be working tirelessly to meet the challenges of safety, performance and cost. The travelling public expects nothing less,” Mr McAllister said.

(gmcg)