Royal Mail suffers brutal investor revolt over pay deal for new chief exec | City A.M.
ROYAL Mail found itself on the end of a brutal shareholder revolt yesterday as investors voted down a pay deal for its incoming chief executive.
More than 70 per cent of votes cast by shareholders opposed a resolution on the company’s remuneration report.
Switzerland-based Rico Back will receive a basic salary of £640,000, which is 17 per cent higher than his predecessor Moya Greene, who hands over the reins in September.
Back is also set to receive a £6m “golden hello” to buy him out of his contract at Royal Mail’s European arm GLS.
Royal Mail said Back’s increased salary made up for his lower pension allowance, arguing that his total pay and benefits will be in line with Greene’s.
The result of the vote at yesterday’s annual meeting is a massive blow for Royal Mail and is one of the biggest shareholder revolts over pay this year.
Miner Petropavlovsk is the only company to have suffered a bigger defeat this year; 71.54 per cent of votes were cast against its remuneration report last month.
Nearly 60 per cent of voting Playtech investors opposed the firm’s pay report in May, while Inmarsat suffered a 58 per cent defeat in the same month.
Earlier this month, shareholder advisory groups Glass Lewis and ISS told investors to vote against the Royal Mail pay deal which hands a full-year cash bonus of £774,000 and 12 months’ salary to Greene when she departs.
Read more: Petropavlovsk investors set to oust board and reinstate former directors
However, the vote is only advisory, so Royal Mail is free to push ahead with its pay plans despite the protests of shareholders.
Orna Ni-Chionna, chair of the group’s remuneration committee, said: “We recognise and understand the reasons why our shareholders felt they could not vote in favour of the directors’ remuneration report (DSS) this year.
“We will consult very closely with them and with the shareholder representative bodies as part of our scheduled review of the company’s remuneration policy.”
She added that Royal Mail had been in contact with many dissatisfied shareholders and will reflect “very carefully” on their main concerns before the next review of the company’s remuneration policy in autumn.
Royal Mail chair Peter Long threw his support behind new boss Back.
“Under Rico’s leadership, GLS has become the leading delivery company of its kind in Europe,” he told investors. “It is making a highly valuable contribution to the wider Royal Mail Group.
“Rico’s track record, his strong commercial acumen and his deep understanding of the delivery industry mean he is ideally placed to lead Royal Mail.”
Read more: Revenue inches up at Royal Mail ahead of possible shareholder uprising