Network Rail suspends executive bonus payments after strike threat
AFX News Limited: 05.25.07
LONDON (Thomson Financial) - Network Rail bosses have suspended their own bonuses after unions threatened strike action when the rail infrastructure group withheld payouts for more than 100 workers over the fatal Cumbria derailment, it said.
Chief executive John Armitt and three other directors decided to defer a decision over payment of their bonuses, totalling more than £286,000, after unions protested against the group's decision to suspend the bonuses of 119 staff who had worked in the area where a Virgin Pendolino derailed in February.
The accident on the West Coast Main Line at Lambrigg, near Grayrigg, resulted in the death of one person and serious injuries to several others.
NR said in a statement that it would withhold a decision about payment of the bonuses of those who had worked on that part of the network until investigators had determined the cause of the crash.
'The companys executive directors have decided to defer their own annual bonus entitlement for this year,' NR said in a statement.
'No decision will be taken on executive directors' bonuses until the causes of the derailment are fully understood.
'This means the decision over the bonus to be paid has been deferred for the entire chain of management command from the board, through the maintenance function, down to the relevant people in the track maintenance depots near Grayrigg.'
However, the Rail Maritime & Transport (RMT) union said it was pressing ahead with a strike ballot on the issue and would announce the outcome on June 25.
RMT general secretary Bob Crow accused NR of effectively 'scapegoating' the workers at Grayrigg.
'If there is to be any disciplinary or criminal process as a result of the investigation, that should be allowed to take its course, but in the meantime we expect to see all our members paid their bonus,' Crow said.
NR said yesterday that its directors' bonuses would be 63 % lower than last year after the company decided to cut executive bonuses by 15 %, on top of a reduction resulting from the commercial impact on the group of the crash.
All NR staff also saw their bonuses fall to £400 as a result of the accident, down from £954 last year.
Network Rail staff pay for fatal crash
Financial Times: May 24 2007
By Robert Wright, Transport Correspondent
Every member of staff at Network Rail, the company that owns and operates Britain’s rail network, will receive reduced annual bonuses after directors decided responsibility for February’s fatal crash at Grayrigg in Cumbria lay with the entire company.
The top four executives saw their annual bonuses cut by 63 per cent because of the move, with John Armitt, the chief executive, due to receive £88,740, as opposed to the £240,408 he received in 2006.
The most junior staff will see their annual bonus cut to £400, from £954.
The repercussions of Grayrigg, where a high-speed passenger train was thrown off the track by faulty points, overshadowed Network Rail’s first annual profit since taking over the railways from Railtrack in October 2002. The company made a pretax profit of £1.48bn in the year to March 31 on turnover of £5.79bn, against a £232m loss on £3.84bn turnover the previous year.
However, while there have been efficiency gains, the main reason for the financial turnround is a settlement struck between the company, the government and the Office of Rail Regulation in 2004 – before the start of the company’s current 2004-2009 regulatory period.
The government was allowed to delay, from April 2004 to April 2006, a scheduled 50 per cent increase in Network Rail’s funding. It was conditional on the money being paid over the remaining three years, with an element to reflect the costs of the company’s extra borrowing in earlier years. The higher payments began with the start of the financial year just ended.
Ian McAllister, the company’s chairman, said the rail network’s performance had improved further in the past year as the result of work by Network Rail and train-operating companies.
“The rail network is benefiting from record investment to meet the growing demands of passengers and freight users,” he said.
Passenger train punctuality over the year was at its best since October 1999, with 88.1 per cent of trains arriving on time – within five minutes of schedule for most trains and 10 minutes for long distance – against 86.4 per cent the year before. The improvement resulted entirely from the efforts of train operators, however. Delays attributed to Network Rail remained steady, at 10.5m minutes of delays.
The company blamed a 700,000-minute increase in delays cased by factors outside its control, such as lineside fires, suicides and extreme weather events. January’s hurricane produced 250,000 minutes of delays in a single day.
Mr Armitt said the company was working hard at reducing some of the external causes of delay.
Alongside the general reduction in bonuses, Network Rail is withholding for the moment the bonuses of all maintenance staff – from the director of maintenance downwards to those working as manual labour on the lines – responsible for the length of track where the Grayrigg accident occurred.
The bonuses will be paid only after the next official report into the accident, which should give greater detail of how the crash came about.
Mr McAllister said the bonuses might eventually be paid but the company had not wanted to take that step until it had seen the accident report.
The company’s executive directors announced on Thursday afternoon, following hostile questioning at a morning news conference, that they would also defer taking their own annual bonuses for the year until after the Grayrigg report.
Meanwhile signal workers who went on strike in Scotland in March will lose £150 of their annual bonuses for each shift missed.
Rail firm chiefs defer bonus payouts
Press Association: May 24, 2007
Network Rail (NR) executives have bowed to fierce criticism about their bonuses by deferring part of the payout until the result of an inquiry into the Cumbria rail crash was known.
The four executive directors had sparked a furious reaction when it was revealed they were taking huge bonuses while deferring those of 119 staff who had worked in the area of the February crash near Grayrigg.
Despite the change of heart, the Rail Maritime and Transport (RMT) union announced it will hold a ballot for industrial action among the workers. The ballot will also cover 400 Scottish signallers and supervisors whose £400 bonuses were cut to £100 because they took part in a strike earlier this year.
A few hours after the figures were announced, NR said the four executive directors were also deferring the annual part of their own bonuses.
Despite not meeting some targets and having 15% of his bonus "docked" due to the Grayrigg crash, chief executive John Armitt was still in line for a total bonus package of more than £200,000. This includes an annual bonus of £88,740 which is now deferred.
His deputy chief executive, Iain Coucher, got a total package of more than £179,000, including a now-deferred annual bonus of £79,220.
The other two executive directors - finance director Ron Henderson and engineering director Peter Henderson - got total packages worth £133,937, including now-deferred annual bonuses of £59,057 each.
The RMT executive agreed that a ballot of both groups of workers will be concluded on June 25, and the union warned that failure to settle the dispute would result in a ballot of all Network Rail infrastructure and signalling staff.
General secretary Bob Crow said: "It seems that our strike threat has shamed Network Rail bosses into suspending part of their own massive bonus payments. But the fact remains that 119 of our members working in the Grayrigg area have been effectively scapegoated by the corporate decision-makers of Network Rail, and that is unacceptable.
"If there is to be any disciplinary or criminal process as a result of the investigation that should be allowed to take its course, but in the meanwhile we expect to see all our members paid their bonus."