Network Rail boss Sir David Higgins and other directors at the company are to waive their bonuses and allocate the money to safety improvements, after political pressure mounted over the payouts.
Higgins, who was due to receive a £340,000 bonus, said the money would go to a fund for rail safety.
"I and my directors decided last week that we would forego any entitlement and instead allocate the money to the safety improvement fund for level crossings. I can confirm that remains our intention," he said in a statement on Monday
The move follows a political wrangle over the proposed payouts. Labour claimed the government could do more to block bonuses for Network Rail chiefs, the day after Justine Greening pledged to vote against a six-figure bonus for the company's chief at their AGM.
The transport secretary insisted on Sunday that she would not be able to halt bonuses for Network Rail but would vote against giving the company's head executive, Sir David Higgins, a £340,000 payout, saying: "The governance structure that the last government set up means that I can go and vote against it.
"The problem we’ve got is that won’t actually necessarily change the result. The other problem we’ve got is that the members can vote against the bonus package but at the end of the day their vote is only advisory."
The secretary of state for transport had never attended an AGM for Network Rail before. But Labour claimed documents show the government has to give "prior written agreement" for bonus packages to go through.
The company's directors could have received bonuses worth 60% of their pay packages. Higgins, his finance director Patrick Butcher, director of asset management Peter Henderson, planning and development director Paul Plummer, operations director Robin Gisby, group finance director Patrick Butcher, and investment projects director Simon Kirby were in the frame for payouts.
The company's chairman, Rick Haythornthwaite, said: "Friday's meeting was not to approve a specific annual bonus payment for Executive Directors, but rather to amend a previously approved long term incentive scheme to ensure additional external scrutiny of performance.
"The issue of annual performance payments would only arise if Network Rail surpassed stretching performance thresholds and would only be decided in May after the end of the financial year."
The company was set up 10 years ago by Labour to replace Railtrack.
In a statement the company said: "The board will take the opportunity to reflect further on how to incentivise performance in the company against the backdrop of the current context. It will continue to consult the Secretary of State on wider issues of governance in advance of the government's command paper."
Transport secretary Justine Greening said: "Network Rail's decision to postpone the meeting planned for this Friday and look again at their proposed executive bonus structure is sensible and welcome."
She went on: "I have made it clear to Network Rail at every stage that this proposed package did not go far enough in reflecting the need for restraint. It was also the wrong time to look at this issue, given I will be shortly unveiling a rail review that will strengthen the corporate governance of Network Rail and see a special director appointed to the board to represent the views of taxpayers.
"The fact that its executive directors have also chosen to forfeit their annual bonuses to improve level crossings is a sign that they have recognised the strength of public opinion."