Rail infrastructure operator Network Rail said yesterday its executives would receive bonuses running into six figures despite failing to meet all its performance targets.

Network Rail (NR) said chief executive John Armitt would get (pounds) 112,320 while deputy chief executive Iain Coucher would get (pounds) 99,840, representing 24% of their basic salaries,

The group's other 15,000 staff will receive bonuses of about (pounds) 600, a spokesman said.

The rises were awarded despite NR's failure to meet its target for train punctuality in 2003-2004.

While the group hit targets for cost savings and condition of infrastructure, it managed to achieve only a 7% reduction in delay minutes, against a target of 10%, in the year to March 31.

However, although Mr Armitt, Mr Coucher and other executives could have received a total award of 32% of their basic salary for meeting two targets, the group said it had decided to limit awards to 24%.

Chairman Ian McAllister said NR had achieved a great deal, including reducing delay minutes to their lowest in four years.

Although targets had been missed, Mr McAllister said punctuality had improved and losses of (pounds) 758m - against operating profits of (pounds) 80m previously - had been expected.

''Following this, I think it is only right that all NR employees will receive a bonus this year,'' Mr McAllister said in a statement.

''We are seeing a substantial improvement in the railways,'' he said. ''Things are getting better, but we have a long way to go.''

He defended the bonuses, saying: ''The bonus system is quite transparent, it was completely laid out . . . the executives earned those bonuses and the bonus system cascades through the company.''

Transport secretary Alistair Darling said: ''NR is making progress in resolving the problems inherited from the disaster that was Railtrack.

''Performance is improving, they have made an encouraging start in reducing costs and in 2003/4 replaced more railway than at any time since before British Rail was created, but there is still more to be done.''

NR said its debts of (pounds) 12.6bn were some (pounds) 1.3bn lower than forecast in 2002.

Last year, rail regulator Tom Winsor decided to raise the company's spending settlement for the next five years to a new level of (pounds) 22.2bn, effective from April this year.

The so-called ''not for dividend'' company, which is limited by government guarantee and has no shareholders, receives half its income in direct grants and the other half through track access charges levied on train operators.

The government set it up after former transport secretary Stephen Byers's decision to put Railtrack into administration.

Liberal Democrat transport spokesman John Thurso said: ''The losses announced today come as no surprise.

''However, Network Rail is a not-for-profit company, funded by the taxpayer and effectively owned by the nation. It is legitimate to ask whether not-for-profit is still appropriate.

''I hope that Alistair Darling will be considering this, among other changes, in his forthcoming rail review.''

Bob Crow, general secretary of the Rail Maritime and Transport Union, which is in dispute with the company over pay, said: ''If things are improving enough for Network Rail's directors to hand themselves six-figure bonuses, then they are improving enough to deliver justice on pensions and travel facilities for our members.''

Talks between the union and NR aimed at averting strikes on mainline railways will be held today and tomorrow.

Shadow transport secretary Theresa May said: ''The cost of delivering rail services has increased threefold under Labour and despite their promises of better railways, they are still unable to deliver.

A spokesman for the Transport Salaried Staffs Association said: ''Network Rail is a not-for-profit company and the public expects it to behave as such. To passengers, these bonuses will smack of a fat-cat culture we had hoped had been laid to rest with the demise of Railtrack.''