By Maximilian Clarke
Network Rail boss Sir David Higgins has rejected his controversial bonus amidst rising public anger.
Rejecting the bonus, Sir Higgins said: “I and my directors decided last week that we would forego any entitlement and instead allocate the money to the safety improvement fund for level crossings.”
The heavily taxpayer-funded infrastructure giant in charge of the UK’s rail network had been preparing six-figure bonuses for a number of executives on top of their annual pay.
But public anger over the decision to reward bosses with taxpayer subsidies after a year of soaring rail costs and serious safety breaches at a time when households continue to suffer a squeeze on incomes, mounted to the extend the company has been forced to reconsider.
Welcoming the news as “a good day for owner activism", the Director General of the Institute of Directors dubbed government's action as a role model for shareholders in shaping corporate responsibility:
Said Simon Walker: "Justine Greening did not believe that senior executives at Network Rail merited their bonuses and said she would vote accordingly at the annual general meeting. We would expect this of shareholders in listed companies, and expected it of the Government in this case. Only through this kind of activism will executive pay be brought into line with performance”.
“Whether Network Rail is technically part of the public or private sector, it is effectively and regrettably a nationalised enterprise. The taxpayer through the Treasury underwrites it. Shareholder activism has never been more necessary than it is today. The Government is in the same position as the pension funds and investment institutions which own public companies. They should all take a vigorous role on remuneration matters."
Although rejection of Sir Higgins’ bonus was his own decision, Network Rail have today announced that a shareholder meeting scheduled for Friday (10th) in which the controversial new remuneration deals were to be discussed, has been postponed.
"Friday's meeting was not to approve a specific annual bonus payment for Executive Directors, but rather to amend a previously approved long term incentive scheme to ensure additional external scrutiny of performance,” commented Rick Haythornethwaite.
"The issue of annual performance payments would only arise if Network Rail surpassed stretching performance thresholds and would only be decided in May after the end of the financial year.
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