Royal Mail Group (LON:RMG) is facing fresh criticism over its executive payouts after it admitted that its new chief executive did not pay British tax on a £6-million award. The news marks another blow for the privatised postal operator which recently warned on profits.
Royal Mail’s share price has fallen deep into the red in today’s session, having given up 1.37 percent to 345.50p as of 08:52 BST. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having climbed marginally into positive territory and currently standing 0.23 percent higher at 7,075.57 points.
Royal Mail faces fresh criticism
The Times reported this morning that Rachel Reeves, chairwoman of the business select committee, had said that ordinary postal workers would be appalled by the payment to Royal Mail boss Rico Back, who succeeded Dame Moya Greene at the helm of the company this summer. Back was given a base salary of £640,000 a year, and last year received a one-off payment of £5.8 million as part of a renegotiation of his contract with the group’s GLS unit. The privatised postal operator subsequently suffered one of the largest pay revolts in UK corporate history, with more than 70 percent of voters rejecting the group’s remuneration report.
“Royal Mail failed to consider any alternative to Rico Back as their new CEO and splashed out £5.8 million on breaking his contract,” Reeves pointed out. “We heard that no UK tax was paid on this astounding multimillion-pound deal.”
The newspaper noted that Royal Mail had said that Back, a German citizen who has lived outside Zurich for more than a decade, will continue to be domiciled in Switzerland while he runs the postal service, but will pay UK tax on all of his Royal Mail earnings. It, however, explained that since its GLS unit was based in the Netherlands, Back had paid tax on the £5.8 million award there.
Analysts on privatised group
The 17 analysts offering 12-month price targets for Royal Mail for the have a median target of 341.00p on the shares, with a high estimate of 575.00p and a low estimate of 250.00p. As of October 13, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group has it that the company will underperform the market.