Appendix 1

Skip to navigation

Renumeration

This report outlines TfL's policy regarding the remuneration of its Board members, the Commissioner for Transport and Chief Officers, who are responsible for directing the affairs of the organisation.

Policy for Board members

Board members are appointed by the Mayor and are independent of the organisation's management. Board members are not required to devote all their time to TfL's affairs. Remuneration for each Board member (with the exception of the Vice Chair) is based on a published formula. In addition to Board activities, the formula relates directly to the number of Panels and Committees on which each member serves. Remuneration also takes into account those members who serve as Chair of the Panels and Committees, up to a capped maximum.

Remuneration levels are set for each Mayoral term, but are reviewed periodically in line with comparable markets to reflect the responsibilities and accountabilities of the role. With effect from 1 August 2004, the basic fee was £18,000 per annum. Board members who act as Chair or a member of a Committee or Panel receive additional fees of £4,000 per annum (as a Chair) and £2,000 per annum (as a member) for each appointment. The maximum payment in aggregate is £24,000 per annum, except for the position of Vice Chair of the Board, where the annual fee is £60,000 per annum in total. The terms and conditions of appointment for Board members are published on the TfL website (tfl.gov.uk).

Policy for Chief Officers

The Remuneration Committee is chaired by the Chair of TfL, the Mayor of London. Two Board members constitute the remaining Committee members. The term of reference of the Remuneration Committee is to review the remuneration of the Commissioner and Chief Officers on behalf of the Board. Chief Officers are employed by TfL or its subsidiary companies and are required to devote substantially the whole of their time to the organisation's affairs. The policy of TfL is to recruit and retain the highest calibre Chief Officers and to provide remuneration packages that reflect their responsibilities, experience and performance. The Remuneration Committee has established a reward structure commensurate with this policy and comparable talent markets.

The constituent parts of Commissioner and Chief Officer remuneration are:

Basic salary

TfL's reward strategy aims to pay competitive market salaries while recognising individual progress and development through the annual performance reviews. Annual increases in base pay are contained within an inflation based budget. However, in setting individual salary levels, the Remuneration Committee takes into account the median position of relevant markets, the remuneration for other Chief Officers, theindividual contribution to the role and any pay parity issues across the organisation.

Performance-related bonus

The Commissioner and Chief Officers are entitled to an annual performance bonus, assessed against a range of business measures. The bonus paid to the previous Commissioner, Bob Kiley, was up to a maximum of £285,000 in any year. The bonus paid to the current Commissioner, Peter Hendy, is up to a maximum of 50 per cent of base salary. The Chief Officers' bonus is currently up to a maximum of 30 per cent of base salary.

Pension arrangements

Chief Officers are eligible to join the defined benefit TfL Pension Fund. The provisions for Chief Officers are designed to give a pension of up to two-thirds of final pensionable pay, part of which can be exchanged for a tax-free retirement lump sum (under current legislation). There is a death in service benefit of four times pensionable pay. Employee contribution is 5 per cent of pensionable pay. Further benefits are provided through the TfL Supplementary Pension Scheme. Only base salary is pensionable.

Other benefits

A private medical insurance scheme is provided. As with all TfL employees, the Commissioner and Chief Officers are provided with a free travel pass for themselves and a nominee valid on TfL transport modes. Chief Officers who joined after 1 April 1996 are eligible to receive reimbursement of 75 per cent of the cost of an annual season ticket on National Rail. Chief Officers employed by predecessor organisations prior to April 1996 receive National Rail discounts in line with the policy of the predecessor organisation.

Commissioner's remuneration

The remuneration of the previous TfL Commissioner, Bob Kiley, for 1 April 2005-31 January 2006 was made up as follows:


Salary	£265,090
Bonus for 2004/05*	£270,000
Bonus 2005/06	£237,500
Compensation forloss of office	£745,000
Termination bonuses	£181,250

Other benefits provided for under the employment contract including accommodation, health insurance, and professional tax advice.

* Bonus is shown in the year in which it is paid.

Peter Hendy was appointed TfL Commissioner on 1 February 2006 with a base salary of £320,000 and bonus as detailed earlier on this page. No base pay increase or bonus payment will be due until April 2007.

Previous Page: Summary of progress towards implementing the Mayor's transport strategy
Next Page: Appendix 2