Royal Mail faces showdown as exec pay comes under fire
Royal Mail bosses are preparing for a showdown with investors at its AGM on Thursday over pay after giving a salary bump to its new chief executive.
Investor advisory firms ISS and Glass Lewis have both suggested shareholders vote against the remuneration reports in part due to the newly-appointed CEO Rico Back being set to receive a higher salary than outgoing boss Moya Greene.
Mr Back is being paid a £640,000 annual salary, £100,000 more than his predecessor.
Royal Mail defended those pay levels, saying it makes up for a lower cash pension allowance, and that his total fixed pay and benefits will be in line with Ms Greene’s.
But ISS highlighted part of Royal Mail’s payment policy in 2016 which said that its remuneration committee “recognises that the pension provision is high” and that it would “adopt a lower percentage for newly appointed executive directors”.
“The level of the former CEO’s pension is not considered a compelling reason for a significantly higher base salary for a new executive director,” ISS said.
Glass Lewis also said it had “severe reservations about supporting the remuneration report”.
“Where an increase in base salary is warranted to facilitate recruitment, we would expect this to take the form of phased increases across the lifespan of Mr Back’s term, reflecting concomitant increases in experience and knowledge.”
Royal Mail recently made headlines for paying a near-£6 million “golden hello” to Mr Back, who took over from Ms Greene last month.
The company said it awarded the hefty sum to buy out his contract at GLS - Royal Mail’s European parcels business where he was CEO.
ISS has raised a red flag over Ms Green’s payouts, which include a full year cash bonus of £774,000 as she heads out the door.