How many people does it take to change a bonus?
Now National Rail’s chief executive is waiving his annual bonus the group should also abandon its search for two dozen people to keep the board in order. This is corporate governance gone mad.
The operator of Britain’s rail tracks and stations has appointed headhunters to find “around 25” public members with diverse skills and experience to hold the Network Rail board to account.
“The role of a public member is similar to the governance role of shareholders of a public limited company,” says the recruitment brief. “Specifically you will be responsible for calling to account the board on its delivery against the company’s targets on safety, reliability and efficiency.”
Well actually, that is not what shareholders do at a plc. They do not check that the train operating companies, for instance, are safe reliable and efficient - merely that they are well orgainised to deliver quality profits. Investors in food companies do not ensure the food or even the factory is safe, etc.
But even if the Network Rail board cannot be trusted to do its job without oversight, what are ministers – effectively the owners - doing? What is the Office of the Rail Regulator doing? It sets the targets and hopefully monitors them.
Why does it need so many public members that Network Rail cannot even work out exactly how many it wants? What board could function with 25 members anyway?
But if these public members are to operate like plc shareholders they presumably will have a view on Network Rail’s bonuses. It paid £55m of them last year including a £305,000 of short-term annual award to chief executive Iain Coucher plus a £200,000 long-term bonus. That more than doubled his pay.
Coucher has agreed to waive this year’s annual bonus but keep the long-term award. Given that Network Rail was fined £14m for engineering work that caused the network to seize up over Christmas 2007 the public members might like to ask why there were bonuses at all. What targets were met?
Not that these public members will be corrupted by bonuses though. For their four or five days a year of work there is no pay at all. The rail company is offering only travel expenses.
May 15th, 2009 at 9:34 am
sir, when are we going to be able to see the bbc saleries expenses bonases etc. for the last four years.
As they are funded by a direct tax, It is imperative that they are published immidiately.