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Network Rail bosses in row over another £12m in bonuses

4 July 2012

Network Rail bosses are planning a long term bonus scheme which will see them paid almost £12 million on top of annual bonuses already worth up to an extra £330,000 a year, the TSSA rail union revealed today.

The move has provoked a behind the scenes row in Whitehall with rail regulators warning the taxpayer funded firm that it would be in breach of its licence if it went ahead with the latest generous scheme.

Steve Russell, head of NR's remuneration committee, has responded to the ORR be telling them he thinks they are being "unhelpful".

The row came in the same week that NR revealed it wants it public members to back a new annual bonus scheme-which could already add 60% to executive salaries-and other bonus payments totalling £2.6 million.

"These people are setting new levels of self aggrandizement at the expense of both taxpayer and passengers," said TSSA general secretary Manuel Cortes.

"They are meant to be running a vital public service which receives £4 billion a year from the taxpayer. Instead they seem determined to turn themselves into millionaires at our expense."

"They want to win a fixed lottery every year.We are talking total bonus payments of £14.3 million over the next three years.

"This has got to be the biggest gravy train in rail history."

The new long term bonus scheme being discussed with the ORR would see the six directors paid a maximum bonus pot of £11.7 million over three years between 2013 and 2015 if agreed performance targets were met.

Each director would be paid over £850,000 on top of all existing earnings.

The payments would be on top of the annual bonus scheme to be consulted on at NR's AGM in Glasgow on July 19.

The two schemes would effectively double the £560,000 salary of chief executive Sir David Higgins by 2015.

But the ORR have made it clear that they are unhappy with the long term bonus scheme which replaces a controversial plan which would have seen Higgins earn over five times his salary over a five year period.

Richard Price, ORR chief executive, has warned NR:

"In terms of the proposals, we do not yet consider that what we have seen from you so far complies with your licence obligations, including our objectives."

Steve Russell, outgoing remuneration chairman, complained that unless the new bonus schemes were soon approved "we invite losses" among the directors.

"It is in this context that I am disappointed by your comment that you do not consider that what you have seen from NR so far complies with our licence obligations.

"Given where we are, this comment is, I believe, unhelpful."
 

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