MPs slam Royal Mail over executive pay after shareholder uprising

[TrueBlueTerrier]

http://www.cityam.com/289791/mps-slam-r ... hareholder" onclick="window.open(this.href);return false;

The chair of the influential Business, Energy and Industrial Strategy Committee (BEIS) has taken aim at Royal Mail’s “incredible” pay deal for its new chief executive.

Royal Mail faced a shareholder backlash at its annual general meeting last week over the decision to pay €6.6m (£5.8m) to incoming chief executive Rico Back and also to pay him 17 per cent more in basic salary than his predecessor.

More than 70 per cent of Royal Mail shareholders voted to oppose its remuneration report, however, the vote was only advisory and Royal Mail is pushing on with its pay plans.

The chair of the BEIS committee Labour MP Rachel Reeves said: “At a time when there are ever louder criticisms of hikes in executive pay, it seems incredible that the RemCo Chair would sign off on such a pay deal.”

“When there is a pay-revolt featuring 70 per cent of shareholders and the company looks to plough ahead anyway, there is bound to be reputational damage. Grudgingly admitting to a failure of communication goes little way to justifying these pay arrangements.”

Reeves wrote to the chair of Royal Mail’s remuneration committee Orna Ni-Chionna querying its executive pay decisions and asking why it ignored the wishes of shareholders.

In reply Ni-Chionna said the £5.8m paid to Back to buy him out of his previous contract as head of Royal Mail subsidiary GLS dated to 2000 when Royal Mail, then in public ownership, acquired German Parcel, of which Back was a shareholder and managing director.

She said that in the aftermath of the shareholder vote: "I have written to our largest shareholders this week to ask for a meeting with myself and our chairman, to make sure that we systematically capture all of their reasons for voting against this resolution.”

She said that results of this consultation would be published within six months.

Ni-Chionna blamed much of the shareholder backlash on poor communication of longstanding contractual arrangements.

"We have not communicated the complexities of these issues to our shareholders as effectively as we would have liked," Ni-Chionna said.

[Bernardson]

A communication company which can't communicate!
All aboard the Money Go Round