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Thursday 8 Mar 2012

NEW CHAIRMAN-DESIGNATE AND GOVERNANCE CHANGES AT NETWORK RAIL

Region & Route:

National

Network Rail today announces:

• its new chairman-designate, Professor Richard Parry-Jones CBE;
• its intention to appoint a non-executive public interest director to its board; and
• a series of changes to its membership structure designed to help its members hold the board to account

The combined changes are the most radical evolution in Network Rail's governance structure since the company was formed nearly a decade ago and a recognition of its desire to be as transparent as possible to the public, who help fund its operations.

Professor Richard Parry-Jones' appointment as non-executive director and chairman designate will be made by the board following a meeting with Network Rail's members in March. The election resolution will go to the company's annual general meeting in July, at which point Prof Parry Jones will take over as chairman and, as previously announced, Rick Haythornthwaite will step down.

Rick Haythornthwaite said: "Richard brings a wealth of experience and insight from his time with Ford, one of the great global companies. In recent years he has brought that experience to bear in the engineering sector and public policy area in this country; co-chairing the Automotive Council and as pro chancellor of Loughborough University. That breadth of knowledge and expertise will be of huge benefit to Network Rail as we strive to deliver our core purpose of improving the railway and delivering value for money both to our customers and the taxpayer. I wish him every success in the role."

Richard Parry-Jones said: "It is a great honour to have the opportunity to serve Great Britain’s railway network and its users, and I very much look forward to working with my fellow directors and supporting the executive team in continuing the strong progress being made to make up for lost time during past decades of underinvestment. I am encouraged by the strong cross-party support for increased investment in our railways to deliver a better service to our customers and to put in place the foundation stones that will provide better value for taxpayers in the future."

David Higgins, chief executive, said: "I am very pleased that Richard has agreed to become our new chairman following the end of Rick’s tenure in July. His very strong engineering background will be invaluable to us and I look forward to working with him in his new role.”

It is envisaged that the non-executive public interest director will be an experienced director, able to ensure that the interests of taxpayers are articulated during board discussions. They will be appointed in consultation with the members' co-ordinator and selected to demonstrate specific skills and interests in public policy, finance and corporate and social responsibility.

Also, in relation to the board, the current senior independent director, Steve Russell, has decided not to stand for re-election at the 2012 AGM. His position will be taken by Keith Ludeman, who has been a member of the board since July 2011 and, given his vast experience in the industry, is particularly focused on the issues of performance and operating company relationships.

The proposed changes to the membership are subject to confirmation by members at the AGM. These include:

• Reducing the number of members from c80 to 40 public members. Industry representatives will no longer sit as members, but will use the many other available channels to liaise with Network Rail senior management. This reduced number of members will allow for more effective and detailed discussion.
• Sharpening the overall scrutiny of the board through quarterly scrutiny panels, in which non-executive directors are called to answer questions on a range of issues in front of the membership.
• A new scrutiny sub-committee of members to hold the Network Rail remuneration committee to account regarding the quality, appropriateness and interpretation of data used by the committee to determine remuneration of the executive directors and the committee’s exercise of discretion.
• Dedicated research support, funded by Network Rail but independent of the company’s management.

These changes complement a number of recently introduced measures to improve scrutiny and enhance transparency. These include publishing all agendas and minutes of member meetings and board meetings on a dedicated members’ website, and annual re-election of the board by members at every AGM.

All these proposed changes have been developed through an ongoing dialogue with the members since January 2011. The reduction in the number of members will be voted on at the company’s AGM in July.