Royal Mail is under mounting pressure to cut executive pay

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Royal Mail is under mounting pressure to cut executive pay after it slashes its dividend to save cash

By Matt Oliver For The Daily Mail

Published: | Updated:

Royal Mail is under mounting pressure to cut executive pay after it slashed its dividend to save cash. 

The struggling postal group called off its investor pay out as it battled to fortify its balance sheet in the face of the coronavirus crisis – hitting hundreds of thousands shareholders, including postal workers. 

But it has yet to impose similar belt-tightening measures on senior figures, including chief executive Rico Back, who can earn up to £2.7m a year. 

The Mail yesterday revealed that Back is running the crucial service from his £2.3m penthouse in Switzerland overlooking Lake Zurich. That provoked outrage among critics who said ‘no other national postal service would have handed the keys to such a domestically-focused public service to someone who lives in a different country’. 

Home comforts: We revealed that Rico Back is running the crucial service from his £2.3m penthouse in Switzerland

And now Royal Mail has come under fire for failing to curb executive pay having docked pay outs to shareholders – including thousands of postal workers – in the form of dividends. 

The Investment Association, whose members look after £7.7 trillion of savers’ money, including the pensions of millions of British families, has called on firms that cut dividends to show restraint when it comes to executive pay. 

The issue has been highlighted by the Mail’s Time to End Fat Cat Pay campaign. Cliff Weight, director of Sharesoc, which represents small shareholders, said: ‘Leaders should lead by example – it is as simple as that. ‘Back and other executives at Royal Mail should take a pay cut. Most other companies seem to have accepted this, but a few bad boards seem to have lost the plot.’ 

A parade of big British firms have unveiled pay cuts for executives after slashing dividends or furloughing staff, including BT, Rolls-Royce, ITV, British Gasowner Centrica and British Airways-owner IAG. 

But Royal Mail risks finding itself at the centre of another storm over fat cat pay after more than 70 per cent of its shareholders voted against the company’s pay policies two years ago. 

Luke Hildyard, director of the High Pay Centre, said: ‘Royal Mail has been hit by a number of executive pay scandals since the company was privatised, and are in danger of becoming the poster child for the kind of cowboy capitalism we have to leave behind in the aftermath of this crisis.’ 

DOING THE RIGHT THING 

A host of British companies yesterday said they would cut executive pay as they grappled with the coronavirus crisis. 

Those who announced belt-tightening measures included Schroders, Aviva, Barratt Developments, Dunelm and Rentokil. 

The bosses of BT, Easyjet, Rolls-Royce, ITV, British Gas owner Centrica and British Airways owner IAG are among others to have sacrificed some of their multi-million pound pay packages in the face of the pandemic. 

A Royal Mail spokesman said: ‘At all times, we have sought to establish a responsible approach to executive pay. 

‘We engaged extensively with our shareholders on our new remuneration policy, which was approved by 99.64 per cent of voting shareholders at our AGM last year. Executive remuneration matters will be considered by the remuneration committee in the normal way as part of our year end process.’ 

She added Back had not received any bonuses last year because ‘the appropriate targets were not met’, while the chief executive had also waived other payouts due for performance in previous years.

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