FIRSTGROUP chief executive Tim O'Toole was offered a bonus of £592,000 for his performance in a year in which profits slumped 87% and was followed by a £615 million fundraising, the rail and bus group's annual report has revealed.

Mr O'Toole declined the pay-out for the financial year to the end of March but the TSSA rail union described the proposed award as "unbelievable".

A spokesman for Aberdeen-based FirstGroup said: "Tim O'Toole has decided to waive his bonus, which was granted to him under the executive annual bonus plan for 2012/13, recognising the additional commitment asked from shareholders, including employees, as a result of the proposed capital raising.

"He was entitled to a total bonus amount of £592,000 which would have been paid 50:50 in cash and deferred shares."

This is the second year in a row Mr O'Toole has declined a bonus.

FirstGroup's remuneration committee, chaired by former City of Edinburgh Council transport convenor David Begg, decided to award Mr O'Toole a bonus of 70% of his basic salary against a maximum of 120%.

After declining the bonus, Mr O'Toole's package amounted to just over £1m, some £30,000 less than the previous year.

Mr O'Toole became chief executive of FirstGroup in November 2010.

The American former London Underground chief, who splits his time between the UK and US, received a basic salary of £846,000, pension allowance of £133,000 and benefits in kind worth £46,000.

The benefits included a £12,000 car allowance, £17,771 in US private medical insurance for himself and his spouse, plus £16,065 to reimburse him of advisory fees, mostly relating to tax in the US and UK.

Manuel Cortes, leader of the TSSA rail union, said: "It is simply unbelievable that FirstGroup wanted to reward Tim O Toole for failure on this scale.

"The company's position is fast approaching critical and it is simply reckless behaviour to be throwing this sort of money at the chief executive at this time.

"Luckily for the shareholders and workforce, Tim O'Toole realised what a terrible message this bonus would have sent out and wisely refused it."

FirstGroup has deferred making any awards under another long-term incentive plan (LTIP).

Currently the scheme can net an executive up to twice their basic salary.

A spokesman said: "We typically set out LTIP awards at this time of year but with our rights issue underway, we decided to defer any award or review of the LTIP scheme until after our half-yearly results in November."

Professor Begg said FirstGroup plans to review its bonus structure "to ensure that the incentive plans in place for executives remain competitive in terms of our ability to attract, motivate and retain talented people and are aligned to the achievement of our business plans".

In May FirstGroup posted an 86.7% fall in pre-tax profit to £37.2m for the year and sought £615m in a three-for-two share issue to pay down debt.

The company, which runs bus services in Aberdeen and Glasgow and operates ScotRail, is struggling with almost £2 billion of borrowings largely as a result of its acquisition of the US bus company Laidlaw in 2007.

It came under further pressure last year when the Government awarded it the contract to run the West Coast Main Line rail franchise between London and Scotland, only to scrap the decision in October due to flaws in the bidding process.

Thousands of FirstGroup employees have been hit as the group's share price has plunged.

It closed last night at 99.35p, up 7.35p, or 8%, on the day.

But the shares have fallen 42.3% in the last year.