Media centre

Wednesday 30 Jun 2004

MANAGEMENT INCENTIVES ALIGNED WITH PASSENGER BENEFITS

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National

Network Rail today defended its draft long-term management incentive plan that will be put before its members at this year’s Annual General Meeting. A Company spokesman said: “The proposed long term incentive plan is a set, three year scheme, based upon clearly defined and tough targets set by the Rail Regulator as part of his recent Interim Review. “The plan ensures that management pay is directly linked to long-term improvements in the railway through better train punctuality and reduced costs. It will only pay out if passengers have seen more trains running on time and the costs of running the railway tumble.  Our proposed plan is unique amongst long-term incentive schemes in being based on the customer experience and not on that of the shareholder.” - ends - Notes to editors:

• It is a licence condition that Network Rail has a management incentive plan for executive directors. The management incentive policy under which each year's plan is devised requires both an annual incentive and a long-term incentive.

• The proposed long term incentive comprises additional cash that becomes payable only against the achievement of clearly defined and stretching measures of performance improvement at the end of a set three year period. A cash plan is proposed as Network Rail does not have shares and cannot provide share options which is the traditional method of providing long-term incentives.
• The proposed long-term scheme would pay out the cash bonus earned in year one (2003/4) in year three (2005/6 – the end of the first three year period) if the tough, passenger focussed and cost reduction targets have been met at the end of year three. This would be the maximum award and relies on the annual customer focussed targets of the annual scheme being met in year one and then continuous improvement throughout the three-year period.

·          The proposed long-term scheme will be voted on by Network Rail's members' at this year's AGM For media enquiries contact: Network Rail press office, 020 7557 8292 / 3