John Armitt, chief executive of Network Rail, offered an unreserved apology after last week's accident, in which Margaret Masson died when a train was derailed by faulty points.

However, Mr Armitt, 60, is expected to beat his £352,720 bonus last year - which took his salary to more than £1m - thanks to improved punctuality during the past 12 months.

The family of Mrs Masson, 84, from Glasgow, were appalled at the prospect.

Niece Connie Leese, of Mosspark, Glasgow, said: "I think it is disgusting. He should have done the honourable thing and stepped down straight away.

"I can't believe he would be offered a bonus after what happened. It just makes you wonder.

"The money should be given to those who suffered in the crash and to the victims. It won't bring my aunt back, but it will help the family."

The London to Glasgow Virgin Pendolino train derailed last Friday evening at Grayrigg, killing Mrs Masson and seriously injuring eight others.

The Rail Accident Investigation Branch said in its report that there was "no complete stretcher bar in place between the switch rails immediately before the derailment".

Investigators found one of three stretcher bars was not in position, two were fractured and bolts were missing.

The bars join the moving rails, keeping them a set distance apart. Although Mr Armitt, who is due to retire in July, accepted responsibility, he refused to quit because it was not the time to "abdicate his responsibilities", he said.

A Network Rail spokesman declined to comment on whether Mr Armitt would take his bonus.

He said: "We are devastated by this and are working with them on this investigation and our priority is to get to the bottom of this.

"Bonuses are a side issue and talking about it is in poor taste."

Bonuses are determined by three things, punctuality, signal efficiency and the organisation's assets - including the points - being in good condition.

See also:

Armitt the calm controller

The Observer: March 4, 2007

Network Rail's boss won admirers for the way he dealt with the Cumbria crash. The unions concur - but what's his legacy? By Juliette Jowit

'I hope that's not the case, but I have to live with the reality that it could be something that has gone wrong under our watch.'

These were the emotional and revealing words last weekend of John Armitt, who, as chief executive of Network Rail, was the man ultimately responsible for the safety of the train line in Cumbria where a woman died after a high-speed train crashed off the track.

Less than two days later the Railway Accident Investigation Branch all but confirmed his worst fears when its preliminary report blamed bad maintenance of a set of points. Armitt immediately accepted responsibility and earned public respect for his conduct, if not the condition of his railway.

In stark contrast to previous accidents when railway leaders appeared to fall over themselves to avoid blame, there was even sympathy for the chief executive, who is just months from his planned retirement this summer. 'I saw him on TV [saying] we have got to take responsibility; that was classic John,' says Chris Garnett, former boss of the high-speed train operator GNER. 'He set a very high standard of dignity and honourable behaviour about how you run a public company.'

Cliches cling to public figures like badly made suits. The most common choices for Armitt are 'softly spoken' and 'considered'. But looking over his history, it's hard to believe that sums him up. A trained civil engineer, he joined John Laing Construction as a graduate and spent 27 years building power stations, oil rigs, airports, roads and hospitals around the world. In 1993 he went to Union Railways, where he negotiated a route and got approval from Parliament for the Channel Tunnel Rail Link - no mean feat when you are cutting through some of the world's most expensive land. In 1997 he took the top job at another construction group, Costain. Rescuing that company, whose shares had been suspended and which was mired in financial problems and investor disputes, would prove to be valuable experience for his next job.

One October weekend in 2001 the government dramatically terminated funding for Railtrack, the privatised network owner, and forced the company into Britain's biggest corporate collapse. Shortly afterwards the administrator, Alan Bloom of Ernst & Young, called Armitt and asked him if he would take over the traumatised company.

Armitt was apparently not the first choice, and for some time afterwards there were questions about whether he was up to the job or not. But he ticked the important boxes: engineering background and experience of railways, government and rescue jobs. Now, whether because he is so universally liked, or because things have improved so much at what is now Network Rail, it is hard to find anybody who will say a bad word about the 61-year-old Arsenal supporter.

'Is there one thing he's done that's wrong? I couldn't point to it,' says Gerry Doherty, general secretary of white-collar union the TSSA. 'There are things he has done we don't agree with, but we talk and try and find a solution.'

When Armitt announced last December that he would be retiring in May, Network Rail put out a statement highlighting the improvements since he took over: costs have been cut by more than £1bn a year while punctuality has improved from 77 to 88 per cent. Armitt undoubtedly deserves a share of this success, but it is hard to apportion glory in such a big organisation. In particular, his deputy and successor, Iain Coucher, is credited with a large part of the turnaround too.

The two men have very different styles: Armitt is reputedly the diplomat and a delegator; Coucher more impatient and, some say, controlling. More than one industry insider told The Observer that, as Armitt's influence has appeared to wane in the last year, the style of the organisation has already begun to change. This will please some but worry others, who point out that infrastructure failures have started to rise in the last six months.

Armitt would be the first to acknowledge he cannot take all the credit for the turnaround, however: few people could have sounded so genuine as he did when he said in his retirement statement: 'Our team has achieved a great deal and I am proud to have led them.'

Where Armitt has made a difference, though, is in the company's vital relationships with government, train operators, and even unions. Garnett suggests that when Armitt first took over he wasn't sure how to handle the operators, but others agree he has since done much to repair the company's arrogant reputation. And even Bob Crow, the RMT's bruiser of a general secretary, agrees Armitt has notably improved staff relations. For example, to the unions' delight, Network Rail brought its maintenance contracts in-house. But the company also took tough decisions, including sacking 600 managers - mostly Doherty's members. 'Number one, he talks with people,' says Crow. 'He's got a real care for the industry. He's a straight bloke to deal with. It's not many chief executives I can say that about.'

This diplomacy was perhaps never so important as after the July 2005 terrorist attacks in London, when Armitt personally handled key conference calls between industry bosses. 'That day he created the calm in the industry,' says one insider at a train operator. 'It was thanks to him that by 5 o'clock the stations were up and running.'

Again and again people use the same adjectives of Armitt: polite, considered, cautious, sometimes patrician - a feeling reinforced by his 6ft 5in height. For some, there has been a little too much caution. Armitt talks of the need to focus on the 'day job' of running the railway. While he is undoubtedly right to do so, there has been frustration he has not done more to provide leadership, especially since the abolition of the Strategic Rail Authority, when the industry badly needs investment to cope with chronic overcrowding. 'He's not a visionary; he's a naturally careful engineer,' says one slightly disappointed industry colleague.

There has also been criticism of pay packages. Last year, Network Rail's four most senior executives shared £1.1m in bonuses. Armitt took just over £350,000, on top of his £500,000 salary. Doherty says he has criticised the payments publicly and privately to Armitt: 'I think it's public money and he shouldn't be taking that. But his view is he could take his skills to the private sector and that's the kind of awards he'd get.'

Nor is the annual bonus row the only controversy Armitt has courted. He caused uproar last year when he said in an interview with The Observer what many in the industry recognised long ago but dared not say: that little-used rural train services should be replaced with buses or taxis and the money saved used to invest in more crowded parts of the network. He has also talked of easing crowding not just by spending money on new infrastructure but also by using ticket prices to spread peak demand. Critics call this disloyal; supporters call it common sense.

The salary comes at a price. Armitt once told an interviewer how he has a pager on or near him 24 hours a day: 'Our national control constantly feeds me with every single event that's happened on the railway.' We can only imagine how the chief executive must have felt when he got the call last Friday night with the news that somebody had died 'on his watch'.

'People don't understand the strain of running a railway - that you live with it all the time,' says Garnett. 'He [always] gave this very calm air; it must have [sometimes] felt like terror underneath, but he never let on.'

The CV

Name John Alexander Armitt

Born 2 February 1946, north London

Education Portsmouth Grammar School; studied civil engineering at Portsmouth College of Technology

Career 1966-1993, John Laing Construction (joined as graduate trainee; chaired Anglo-French Severn Bridge project in 1976); 1993-1997, chief executive, Union Railways; 1997-2001, chief executive, Costain Group; 2001-date, chief executive, Railtrack Group (in administration) and chief executive, Network Rail

Honours Awarded CBE in 1997

Family Lives with partner; son, daughter and two grandchildren from previous marriage.

Interests Lifelong Arsenal supporter, theatre, golf, sailing, fishing