Media centre

Tuesday 9 Apr 2013

Network Rail makes partial award of 2009-12 long term incentive plan

Region & Route:

National

Network Rail has announced that four of its executive directors have been awarded a portion of their Long Term Incentive Plan (LTIP) payment, reflecting the performance of the company in the period 2009-12. The payment has been reduced to take account of some safety and train performance issues.

In the period 2009-12 Network Rail:

• cut the cost of running the railway by £1.6bn, making substantial savings for the taxpayer
• achieved £526m in incremental savings (called Financial Value Added or FVA) above the Office of Rail Regulation’s (ORR) original target
• as a result of out-performance on efficiencies, £152m was returned to governments

The period also saw:

• passenger journeys rise by 13%
• the number of passengers arriving on time rise by 13%
• freight traffic rise by 10%
• 6,000 projects worth £12bn completed, including renewing and rebuilding 849 bridges and 121 tunnels, replacing 785 sets of points and renewing over 3,000 miles of track, as well as landmark projects such as the new King’s Cross concourse opened

As a result the railway in Britain has now been recognised by the European Commission as Europe’s most improved railway over the last 15 years, despite having one of the most densely used and congested networks.

Under the terms of the 2009 LTIP scheme, approved by the company's Members and a requirement of Network Rail’s ORR licence, the four directors qualified for a 100% payout as a result of the extensive savings made. However the company's remuneration committee decided to reduce the award by 20% to take account of specific safety and train performance issues:

• Safety - reduction of 10% to reflect workforce safety, level crossing safety and enforcement notices over the period;

• Train performance - reduction of 10%: significant improvements were achieved, but train performance targets were not met.

The committee also decided that the payments should be phased, with 60% being paid now, and the balance to be reviewed at the end of the control period in 2014. This payment represents 0.12% of the £526m of taxpayer savings achieved by the company.

Richard Parry-Jones, Network Rail's chairman, said: "The railway today is considerably more efficient, carries more passengers and freight, and is in a much better state than it was in 2009.

“Taxpayers have benefited from very significant savings, with a further £526m saved over and above our tough targets. Passengers have benefitted not just from more trains, but also more of those trains arriving on time. And we have made real progress in renewing our Victorian legacy. Not everything has been perfect - and the 20% reduction we have made reflects that. But it would be flying in the face of reality not to acknowledge the real progress Network Rail has made in this period, and these payments reflect and recognise that success."