The finance director of one of the UK’s worst-performing train companies could receive a #0.5m pre-tax windfall in the latest ‘fat cat’ pay row.
The deal with construction company John Laing could net Chiltern Railways’ FD Tony Allen #544,000. Laing plans to increase its share of Chiltern’s holding company, M40 Trains, from 26% to 84%.
Only 6 of the 25 train companies had a worse punctuality record than Chiltern in 1998’s performance tables, published by the Office of Passenger Rail Franchising.
M40 Trains took over ownership of Chiltern’s seven-year franchise on 21 July 1996. At that time 294,118 shares were issued, at #1 each.
Allen currently owns 8.5% of the company’s shares and the deal would reduce his holding to 2.89%.
The rail company runs services from London to Buckinghamshire, Oxfordshire and the West Midlands.
Chiltern’s managing director Adrian Shooter said: ‘The deal will provide us with greater financial muscle to invest in improving services for our growing numbers of passengers.’
Shooter was reported to have invested #50,000 of his personal funds into the franchise – money he would have lost if the company failed.
The arrangements are still subject to approval by OPRAF, the rail regulator and the Office of Fair Trading.
OPRAF franchising director John O’Brien said he would be looking carefully at the deal.
‘I want to ensure that the proposed deal is in the best interests of passengers before giving my approval. In similar cases, this has meant negotiating a satisfactory passenger dividend,’ he said.
The Association of Train Operating Companies said: ‘The only real issue is the balance to be struck between deterring potential investors at the outset and the ability for the taxpayer to recoup later profits generated – which is attractive in principle.’
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