Royal Mail Group (LON:RMG) is facing a shareholder revolt over its decision to pay a higher salary to its new chief executive Rico Back, than that of his predecessor, the Financial Times reports. The news comes ahead of the company’s annual general meeting (AGM) on July 19, which will be preceded by the group’s trading update on July 17.
Royal Mail’s share price fell in the previous session, giving up 0.88 percent to close at 486.70p, underperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.92 percent higher at 7,687.99 points. The group’s shares have added more than 18 percent to their value over the past year, as compared with about a 4.6-percent gain in the Footsie.
Royal Mail faces investor revolt
The FT reported this morning that both Institutional Shareholder Services and Glass Lewis had recommended that shareholders reject Royal Mail’s pay report at its upcoming AGM. In addition to Back’s increased base salary, ISS has also flagged concerns that outgoing CEO Moya Greene is let to leave the company with a pay-off of more than £900,000. Glass Lewis meanwhile noted that since Back was appointed with a salary that was 16.8 percent higher than Greene, at £640,000, it could not recommend supporting the pay report.
The newspaper reported that Royal Mail had explained that it had sought to ensure broadly the same level of overall fixed cash remuneration, with the new chief executive’s bigger compensating for the almost halving of a cash pension allowance.
Analysts on postal operator
The 16 analysts offering 12-month price targets for Royal Mail for the FT have a median target of 512.50p on the shares, with a high estimate of 630.00p and a low estimate of 400.00p. As of July 6, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group has it that the company will underperform the market.