The state-backed company announced yesterday that its board would be given performance payments amounting to 55% of their basic pay - just short of the maximum possible payout of 60% - to recognise the progress made in cutting rail delays.

The biggest beneficiary of the boardroom settlement will be the chief executive, John Armitt, who will receive a total package of £754,000, including a bonus of £269,000.

His deputy, Iain Coucher, will receive £673,000, which includes a performance payment of some £240,000.

Two other executive directors, Ron Henderson and Peter Henderson, will each get £502,000 including bonuses of £179,000. All 27,000 employees will get a performance payment of £1,112.

Network Rail has comfortably exceeded forecasts in improving punctuality; the proportion of trains running on time rose 2.4% to 83.6% in the year to March, against a target of 82.8%.

But the company has come under fire from train operators for consistently failing to agree timetables 12 weeks in advance, which is a problem that has prohibited many passengers from securing cut-price advance purchase fares on inter-city operators such as Virgin Trains and GNER.

The rail regulator, Chris Bolt, wrote to the company in March, pointing out that Network Rail was "seriously in breach" of its operating licence. Mr Bolt asked the company's remuneration committee to take this into account when awarding bonuses.

A spokesman for Mr Bolt yesterday said the regulator would seek changes to the incentive scheme for future years: "Passengers will not tolerate any further failure to provide the information necessary for advance bookings."

The chairman of Network Rail, Ian McAllister, insisted that bonuses were needed to retain experienced executives. "We are re-engineering this company and that's a very, very major challenge," he said.

He noted that the company had taken 15,000 maintenance workers in-house from private contractors, laid 600 miles of new rail and had kept broken rails at a record low level.

"If you look at the bonuses paid to any of the directors of FTSE 100 companies, ours are substantially below," said Mr McAllister.

But unions were angered by the payments. Gerry Doherty, the leader of the Transport Salaried Staffs' Association, said: "It's little wonder that these guys are considered 'fat' controllers.

"It's scandalous that executives have been rewarded with such largesse from public funds for a performance that doesn't even match pre-Hatfield standards."