Chairman hits out on CEO pay freeze

[TrueBlueTerrier]

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The culture-clash between the British government’s stance on executive pay and the bosses of companies the government has a major stake in has again raised its head over the remuneration package of Royal Mail LON:RMG chief executive Moya Greene. Royal Bank of Scotland LON:RBS chief Ross McEwan’s used the occasion of the bank’s positive Q1 results at the end of last week to suggest the government, which owns 81% of the bank after a 2008 bailout, was threatening RBS’ recovery by blocking his proposal to break with the EU bonus caps, risking the loss of top performing management. This time Royal Mail chairman Donald Brydon had wanted to improve the salary and bonuses of Greene, who oversaw the company’s IPO last year, on the basis that as the lowest paid CEO of a FTSE 100 company she may otherwise be coaxed away. Brydon’s statement that “I think it’s only fair to pay Moya the right market rate for her job,” left little room for doubt as to what he thought of the Royal Mail’s remuneration committee to not propose either a base pay increase of new incentive scheme for the CEO.

The government, which holds on behalf of the taxpayer a 30% stake in Royal Mail has taken an uncompromising position over executive pay and last week wrote to FTSE 100 companies telling them to “act responsibly” and “exercise proper discipline” in setting boardroom pay. This message was delivered by UK business secretary Vince Cable, whose department is responsible for the government’s remaining stake in the newly privatised postal service.

The government is putting pressure on big business, most likely with one eye on public opinion, over salary and bonus packages awarded to top executives. In what can be seen as a reference to Barclays’LON:BARC and Lloyds LON:LLOYside-stepping of the EU bonus cap by awarding executives share-based bonuses rather than cash, Cable warned companies against such tactics:

“Unless business is seen to act responsibly, pressure for further action will result.”

Perhaps mindful of the public backlash which provoked her into handing back a £250 000 allowance towards buying a house in London on her appointment to her position in 2010, Canadian Greene is said to have supported the committee’s recent decision. Ms Greene has received a basic salary of £498 000 since her appointment in 2010, which reached £1.5 million last year through bonus top-ups, many related to the company’s floatation, up from £1.1 million the previous year.

The Royal Mail’s main union, which fought hard for staff to be given a slice of the cake when the company went private last year is said to have put pressure on the board regarding Ms Greene’s package. Dave Ward, deputy general secretary of the Communication Workers Union stated that“companies such as Royal Mail should be mindful of the gulf between the pay of senior staff and the lowest-paid employees.”

Royal Mail shareholders are likely to be split between support of moderation in the chief executive’s pay package and concern that the lowest paid boss of a FTSE 100 company, generally considered to be doing a good job, may well be tempted away to more fertile pastures at some point.

A Thompson Reuters poll of 15 analysts offering 12 month price targets for Royal Mail PLC have a median target of 570.00, with a high estimate of 765.00 and a low estimate of 450.00. The median estimate represents a 5.85% increase from the last price of 538.50

As of market close 06.05.2014 buy Royal Mail shares at 543.00p

As of market close 06.05.2014 sell Royal Mail shares at 541.50p

[Grinder64]

http://invezz.com/news/equities/10730-R ... pay-freeze

This time Royal Mail chairman Donald Brydon had wanted to improve the salary and bonuses of Greene, who oversaw the company’s IPO last year, on the basis that as the lowest paid CEO of a FTSE 100 company she may otherwise be coaxed away. Brydon’s statement that “I think it’s only fair to pay Moya the right market rate for her job,”

Why don't they just get a room together...

[Budfrog]

Moya Greene isn't solely responsible for making Royal Mail a successful, profitable organisation, it also requires the hard work of thousands of postal staff and her pay rises should be index linked those of everyone else.

[redandblue]

They really have no shame.

[redneck]

Donald Brydon should be seen and not heard, the sycophantic comments in support of Moya are pretty vile.