News Column

Royal Mail faces fractious AGM over boss's pay: Shareholders question Greene's pounds 1.35m package Fury at company warning of threat to rural deliveries

July 21, 2014

Rupert Neate

Royal Mail will face a stormy shareholder protest this week when the company holds its first annual meeting since privatisation.

The 500-year-old company is likely to face questions about the pounds 1.35m pay package awarded to the chief executive, Moya Greene, and its warning that the universal service obligation - the pledge to deliver to every address in the country for the same price six days a week - is under threat.

The company, which the government privatised in October 2013 at a pounds 1bn loss to the taxpayer, according to a committee of MPs, will hold its first annual meeting as a FTSE 100 firm in Birmingham on Thursday. It will also update the City on its latest financial performance, which has been worrying some analysts, in an interim management statement tomorrow.

Royal Mail's chairman, Donald Brydon, also chairs the FTSE 100 software firm Sage Group. Pirc, the investor advisory group, is concerned about multiple chairmanships and Brydon's ability to do both jobs, and is urging shareholders to vote against his appointment. Serial boardroom director Sir John Peace, who chaired three FTSE 100 firms - fashion house Burberry, Standard Chartered Bank and credit-checking company Experian - faced a hat-trick of rebellions in recent meetings.

Greene's pay is likely to be among the biggest issues for Royal Mail's private shareholders at Thursday's meeting in the National Exhibition Centre. The Canadian chief executive collected total pay, bonuses and pension contributions of pounds 1.35m in the last financial year. Her pay would have been higher were it not for the intervention of the business secretary, Vince Cable, who queried a pounds 250,000 housing allowance, which she gave back.

Nevertheless, her total pay was still 50 times the average pounds 27,036 collected by her 150,000 staff. The average bonus handed to postal workers was pounds 514 - compared with Greene's long- and short-term bonuses of pounds 873,000. She was also handed 65,880 bonus shares in the company worth an additional pounds 328,000 at Friday's share price. However, the share award is subject to conditions and will not pay out for three years.

Although she voluntarily repaid her housing allowance, Greene said she was "deeply offended" by the criticism over her pay and benefits.

Brydon has described Greene as the worst-paid chief executive in the FTSE 100 and said Royal Mail must improve her remuneration package or risk losing her. "I think it's only fair to pay Moya the right market rate for her job," he has said.

Research by the High Pay Centre put the average total pay of FTSE 100 bosses in 2013 at pounds 4.2m.

Shareholders are also likely to express anger at the warning that postal deliveries to rural areas are under threat because rivals are being allowed to cherrypick easy and profitable deliveries in towns and cities without having to run services to homes in isolated areas.

Greene issued the warning over the universal service obligation (USO) as the company reported a 12% rise in full-year operating profits to pounds 671m in May.

She said rival TNT Post UK's ability to pick off profitable routes in big cities was "striking at the economics of the universal service obligation". TNT has launched "final mile" delivery services in London, Manchester and Liverpool, and plans to deliver to up to 42% of addresses by 2017.

Ofcom, the regulator, said it did not believe the universal service was at risk. It is due to review the service next year, but Labour has called for the review to start early and said it would safeguard the USO if it won the next election.

Royal Mail will also face a tough time over revelations last week that it could be fined up to pounds 160m over an investigation into alleged breaches of anti-trust laws by its parcels division GLS in France.

While Royal Mail's big institutional shareholders made substantial profits buying up and immediately selling the company's shares, which soared by 38% on the first day of trading, most of the thousands of private investors have held on to their holdings. The shares, which were floated at 330p and rose to a peak of 615p in January, closed at 471.7p on Friday.

Analysis of trades by stockbroker Peel Hunt suggests 76% of individual investors still own the 227 shares they bought.


Moya Greene, Royal Mail's chief executive, collected a pay package of pounds 1.35m last year, but handed back a pounds 250,000 housing allowance Photograph: Royal Mail

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Source: Guardian (UK)

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