Lothian Buses bosses under fire over salaries higher than PM and judges

Lothian Buses boss Ian Craig in On the Buses. Montage: DAVID HAMBURGH
Lothian Buses boss Ian Craig in On the Buses. Montage: DAVID HAMBURGH
41
Have your say

DIRECTORS at Lothian Buses have been paid £175,000 in performance-related bonuses, pushing their incomes far above that of the Prime Minister and High Court judges.

The publicly-funded firm handed a £47,200 bonus to managing director Ian Craig on top of his £160,000 salary, taking his pay to £208,100 when added to other benefits.

Three other directors on salaries of around £145,000 were given payments of £42,900 in 2011-12.

Unions and politicians today criticised the move at a time when passengers face the threat of a 10p rise in fares next year due to a shortfall in concessionary travel, which follows an increase of the same amount in March.

But Lothian Buses said the payments were linked to good performance by directors and highlighted that much of the £13 million profit from operations in 2010 was put back into investing in its 600 vehicles and 55 routes.

The payments only emerged when Edinburgh City Council, which owns 91 per cent of Lothian Buses’ shares, published the figures for the first time in its unaudited accounts.

City transport leader Lesley Hinds said she was unaware of the decision to hand out bonuses and pledged there would be greater scrutiny of such decisions in future.

She said: “This decision was made without input from the council and I’m sure the public will be questioning the level of these bonuses in the current economic climate.

“I’m determined to ensure more public scrutiny of these decisions in future.”

Earlier this week, it emerged former directors at the axed tram project firm TIE were handed £406,000 in pay-offs and hundreds of thousands more for payments from notice periods they did not have to work.

But Neil Renilson, former chief executive of Lothian Buses, said it was right that senior executives at the bus firm were rewarded for turning losses in 2008 to significant profits since 2009 and also for ensuring buses run on time.

He said: “Lothian Buses is a successful company providing a high-quality service to the people of Edinburgh and the Lothians – a rather different business to TIE.

“Payments made to the staff of Lothian Buses are payments for success, unlike the payments to staff at TIE, which were for failure.”

On a salary of just under £160,000, Mr Craig already earns more than Prime Minister David Cameron who collects £142,500 – previously cut from £194,000 by Gordon Brown.

With a £47,200 bonus and other benefits totalling £1260 – taking it to £208,100 – he overtakes the £172,000 collected by High Court judges in Scotland and approaches the £214,100 collected by head of judiciary Lord Gill, the Lord President.

His wage also tops David Strang, Chief Constable of Lothian and Borders Police, who earns £142,000 and is entitled to a 15 per cent bonus which he does not claim.

Lothian Buses operations director Bill Campbell receives £145,100 – rising to £189,200 after bonus – and engineering director Bill Devlin collects £145,000, which rises to £190,300 after bonus.

Finance director Norman Strachan receives £144,400, rising to £188,600 with bonus payments.

Pat Rafferty, Scottish Secretary of the Unite union which represents drivers, said directors are already paid enough.

He said: “These directors are already remunerated handsomely and there should be no place for an executive bonus culture in public services. The size of these bonuses are neither right nor fair.

“Lothian Buses turns over a decent profit for a publicly-owned bus company and we want to see it put back into services, back into terms and conditions for our workers, into modernising the fleet that are going to benefit the passengers, the public and the workers.

“The success of Lothian Buses is down to its publicly-owned status, to the workforce and to the loyalty of the travelling public that means the company can see the kind of ticket sales it does.”

Sarah Boyack, the Labour local government spokeswoman and Lothians MSP, said it is front-line staff such as drivers who play a major role in making the firm a success.

She said: “When only those at the top get financial bonuses, people are bound to ask about fairness for the rest of the employees who have been working hard to make the company a success.

“I can’t imagine bus users who have had to pay extra in fares will be particularly happy either.”

Mr Craig said: “Lothian Buses is a commercial business, Edinburgh City Council being the majority shareholder. Directors are remunerated fairly and in line with their roles and responsibilities. The board independently sets directors’ salaries, and any bonuses paid are performance-related.”

The same accounts also show that bosses at two of the council’s other subsidiary companies – EDI Group and Edinburgh International Conference Centre (EICC) – made six-figure sums in 2011-12.

EDI Group’s operations and finance director, Eric Adair, made £102,901 while EICC chief executive Hans Rissmann made £148,234, including a bonus of £18,373.

FARE WHACK

Ian Craig, managing director, Lothian Buses: £208,137

W Devlin, engineering director, Lothian Buses: £190,374

W Campbell, operations director, Lothian Buses: £189,225

N Strachan, finance director, Lothian Buses: £188,610

High Court Judge: £172,753

NHS Lothian chief exec: £170,767

Sue Bruce, Edinburgh City Council chief exec: £158,553

David Cameron, Prime Minister: £142,000

David Strang, L&B Chief Constable: £142,000

Alex Salmond, First Minister: £135,605

Average SPL footballer salary: £120,000

MSP: £57,521

HITTING THE TARGET

BUS chiefs are handed bonuses for hitting certain targets – and they can be lost for failure.

The News understands that payments are linked firstly to the overall financial performance of the company. It lost £800,000 in 2008 but returned to profit with £5.7 million in 2009.

Secondly, individual directors will be judged on their performance, with directors effectively receiving marks for a strong or weak showing in key areas. This might include the handling of a crisis and managing their team.

Finally, each bus chief will be judged on how well their directorship has performed and if set targets are met.

The finance director bonus could be cut for cost overruns or for failure to meet certain cost-saving targets.

The engineering director bonus could be affected by the number of breakdowns, which would delay passengers.

The operations director bonus could be reduced if services are cut due to too many drivers being off sick.

One former senior figure claimed bonuses, along with competitive salaries, are key to ensuring the best individuals can be attracted to the firm. They added: “If you’re going to attract quality staff from First, Stagecoach and Arriva to ensure the service is the best it can be, you need to offer a decent package.”

ANALYSIS: David Lonsdale, assistant director of CBI Scotland

While we can’t comment on individual cases or firms, the CBI has been clear that high-level pay must always be squarely linked to performance.

People should be rewarded for good work, and payment for failure is unacceptable, but it must be recognised that the jobs market for senior company executives is often one where talent competes globally.

Claims that there is no link between executive reward and company performance are misleading.

The median rate of growth in profit for FTSE 100 companies since 2003 has been more than twice the median growth rate of chief executive remuneration over the same period.

But it is true that some companies are ahead of others when it comes to clearly demonstrating how their pay strategy is connected to performance. This clarity and transparency must now become standard.

Recent announcements by the UK Government in this area will help ensure proper attention is given to what signals pay decisions send out to the wider company and the community in which it operates.