The Office of Rail Regulation (ORR) has complained to Network Rail about its poor performance in an attempt to stop the company from awarding its directors large bonuses.

In a sharply worded letter obtained by The Times, the regulator lists the targets that Network Rail has missed and its breaches of the licence agreement and safety rules. Bill Emery, chief executive of the ORR, wrote to Jim Cornell, chairman of Network Rail’s remuneration committee, on May 9 to draw his attention to the company’s failures.

The ORR has fined Network Rail £14 million for its failure to finish engineering works on time after Christmas, resulting in severe disruption for several days on the West Coast Main Line. It also fined the company £2.4 million last year for disruption in the Portsmouth area.

Train companies fear that the fines have little impact on Network Rail, a monopoly with no shareholders that depends on public subsidy. The fines, paid to the Treasury, account for less than 0.3 per cent of the company’s annual income.

Senior figures in the ORR believe that cutting the bonuses of the three executive directors may be a more effective way of holding Network Rail to account. The maximum bonus is 60 per cent of salary, which would amount to more than £300,000 for Iain Coucher, the chief executive, and more than £200,000 for Ron Henderson, the finance director, and Peter Henderson, the infrastructure director. The executive directors shared a payout of £268,000 for 2006-07 — down from £775,000 the previous year.

Mr Emery’s letter said that Network Rail had fallen “well behind target” on delays, because of infrastructure works on the East Coast and Great Western lines. He also drew Mr Cornell’s attention to safety failures.

A Network Rail spokesman said: “Some of the ORR’s points are a bit wide of the mark and we are sending a letter back.”

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