Royal Mail suffers shareholder defeat over directors' pay
Royal Mail shareholders have voted against the firm's plan for directors' pay after a row over a salary rise for its new Zurich-based boss.
The directors' remuneration report (DRR) was rejected in a vote declared at its annual general meeting in Sheffield on Thursday, with 70% of proxy shareholders voting against the package.
The board responded to the vote, which is not binding, saying it will consult further as it reviews its remuneration policy later this year.
Investor advisory firms ISS and Glass Lewis suggested shareholders vote against the remuneration report, in part because newly appointed chief executive Rico Back is 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.
But chairman Peter Long told the sparsely attended meeting that differences in pension arrangements meant his "fixed pay" will be "exactly the same" as Ms Greene's.
Mr Back has decided to stay in Zurich, Switzerland, with plans to commute regularly to work at Royal Mail's London headquarters.
Royal Mail stressed that he had been living in Zurich with his family for more than 10 years and will pay full UK tax on all of his earnings including bonus payments.
After the meeting, the board's remuneration committee chairwoman Orna Ni-Chionna said: "We are very disappointed that the advisory vote on the DRR was not carried.
"We have worked hard since becoming a public company to take a highly responsible approach to executive pay and have enjoyed strong support from our shareholders on all remuneration matters until this vote.
"We recognise and understand the reasons why our shareholders felt they could not vote in favour of the DRR this year.
"We have already been in contact with many of them and will reflect very carefully on their main concerns. 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. This is due to take place in the autumn.
"In our engagement with shareholders, we explained that the retiring CEO's and the incoming CEO's overall fixed cash remuneration - their base salary, pension entitlements and benefits - are broadly the same.
"The incoming CEO's pension entitlement is lower and the salary is higher than the retiring CEO. We did not feel it was appropriate to reduce the fixed pay for this very demanding role.
"Any potential increase in Rico Back's variable pay is subject to meeting stringent performance conditions."
The proxy votes declared at the AGM were 70.18% against the directors' remuneration report with 29.82% for.