Rail Professional opinion Katie Silvester, editor


Now for the bonus question…


So the Network Rail board has bowed to pressure to waive its bonuses – following the outcry over bankers’ bonuses and unfavourable press coverage about its own bonuses – and the six executives have donated the money to a safety fund instead (see page 6). It’s not the first time that Network Rail executives’ bonuses have received media attention.


In fact it happens most years. The previous Network Rail CEO, Iain Coucher, waived part of his bonus to avoid criticism 12 months ago. But this year’s bonuses got even more widespread comment than in previous years, coming so soon after Network Rail’s admission of guilt over the Elsenham level crossing deaths, and right on top of the furore of the Royal Bank of Scotland’s bonuses, which RBS CEO Stephen Hester also turned down in the face of strong public pressure. Surely it must be time for a different approach. It just makes no sense to structure


a senior executive’s remuneration package as part salary and part bonus and then, each year, when the bonus is due, make the executives in question feel so bad about taking what they are entitled to that they feel obliged to turn it down. This is more or less what the Conservatives did – transport secretary Justine Greening said very publicly that she didn’t want to see the Network Rail board take up their bonuses, and that she would use her vote as a Network Rail member to vote against the proposed bonuses. But David Higgins – who, as CEO of Network Rail, was due the biggest bonus


and, therefore, came under most pressure to refuse it – was appointed to his post after the coalition government came to power. So Greening is effectively saying: ‘OK, we structured your remuneration package to be part salary and part bonus in the first place, but we did so with the intention of pressurising you to turn down part of it each year, no matter how good or bad performance was.’ The Elsenham level crossing tragedy, don’t forget, happened years before David Higgins joined Network Rail, so he was in no way personally culpable. So why structure Network Rail’s executives’ remuneration packages in this way in


the first place? When Network Rail was first incorporated, a bonus-style remuneration system was written into its statues, as it was thought to be consistent with the civil service where senior staff often receive bonuses, as well as echoing salary structures popular in private sector engineering companies. But in recent years, and particularly when the country is in recession, the public – fuelled by the press – has come to see senior executives as greedy if they take their bonuses, particularly if they work in an industry that receives public money. So let’s avoid the annual witch hunt and restructure the Network Rail executives’


remuneration packages so that they do not include a bonus, just a straight salary. Of course, many will still baulk at their salaries – David Higgins gets a salary of £560,000 before bonuses are even taken into account. He would have been due to receive up to 60 per cent of this again, as an annual bonus. The bonus structure also gives the board long-term incentives, which, combined with the annual bonus, would have effectively let Higgins double his salary over five years, if he received the full whack. If Higgins got a salary of £1m a year, plenty would still think that too high. Maybe there is a middle ground, but that should have been squared before he started in his role, not publicly dissected every year when the bonuses come around.


PAGE 4 MARCH 2012


News in brief


Signalling apprentices sought


Sims, a signalling specialist, is searching for two new apprentices in its bid to attract young people to the industry. The scheme will combine classroom learning with on-the-job mentoring. The closing date for applicants is Saturday 31 March.


Olympic negotiations continue


The RMT has rejected a £500 bonus for Tube workers during the Olympics. However, the union and TfL have reached an agreement worth £2,500 for DLR staff working through the Olympics and Paralympics. That deal comprises a £900 attendance bonus, paid at £100 per week over nine weeks for all grades.


Golfers invited to enter charity tournament


Amateur golfers are being sought for the Railway Benefit Fund’s Annual Golf Day on Thursday 7 June. Teams of four rail industry golfers will compete for the Barlow Cup at Hendon Golf Club in north London, paying £550 to enter. Contact David Allen at davidallen56bc@yahoo.co.uk


Conductors sacked over passenger fight


The RMT in Scotland is balloting for strike action over the dismissal of two ticket examiners. The union claims the pair were defending themselves from a gang which had subjected them to violence and intimidation over two years. ScotRail has stood by its decision to dismiss them for gross misconduct.


Green vehicles get parking discount


Drivers of low-emission vehicles are paying reduced parking charges in station car parks following the launch of a scheme by First Capital Connect. Drivers are given a 10 per cent discount when they purchase a season ticket with RingGo, FCC’s mobile payment system.


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