Royal Mail engulfed by rewards for failure row
After profit warning sends shares crashing 25pc
ROYAL Mail was last night accused of handing its current and former bosses huge rewards for failure after a shock profit warning sent shares crashing 25pc.
Nearly £1.2bn has been wiped off the value of the company since Monday afternoon when boss Rico Back revealed profits would come in between £500m and £550m this year – well below the £694m it made last year.
To make matters worse for investors, analysts believe the dividend could be under threat, while households also face the prospect of paying higher prices for stamps as Royal Mail seeks to bolster its finances.
The turmoil sparked a further backlash over fat- cat pay at the delivery firm. Royal Mail suffered one of the biggest shareholder revolts in UK corporate history over the summer when 70pc of investors voted against excessive pay in the boardroom including a £2.4m golden goodbye for outgoing chief executive Moya Greene and a £6m golden hello for Back, her replacement, who started in June.
Last night critics said those pay deals, signed off by former chairman Peter Long, his replacement Les Owen and Orna Ni-Chionna, head of the remuneration committee, seemed even more egregious in light of the company’s plummeting fortunes.
Cliff Weight, from individual shareholder society Sharesoc, said: ‘With the benefit of hindsight, it rather looks like rewards for failure. The remuneration committee has serious questions to answer and I will be going to the next AGM to ask them.’
Under a deal struck with the Government before Royal Mail was privatised, Greene was handed a £914,000 payment for loss of office after she stepped down on June 1.
Separately she also continued to collect her bonus and salary until September as well as being in line for a possible 251,951 shares depending on performance. Their value has fallen by about £298,000 in the past few days to about £903,000. Back, 64, who is running Royal Mail from his home in zurich, was paid £6m to buy him out of his contract with Royal Mail subsidiary GLS.
Shares eventually recovered yesterday to end the day down 8.4pc, or 32.8p, at 358.6p.
A Royal Mail spokesman said: ‘It is right to honour contractual entitlements, as we would for any employee. Our strong balance sheet and long-term cash generation characteristics support our commitment to our progressive dividend policy.’