Two influential shareholder advisory groups have advised investors to oppose the new Royal Mail chief executives pay which they describe as excessive.
Long-serving chief executive Moya Greene is standing down to be replaced by Rico Back, head of Royal Mail subsidiary GLS.
Shareholder adviser group Glass Lewis recommended investors oppose Royal Mail's remuneration report because the base salary of incoming boss Back is 16.8 per cent higher than Greenes.
Institutional Shareholder Services (ISS) also criticises Backs salary and also attacks Greenes “excessive” termination payments.
A Royal Mail spokesperson said: “We have sought to ensure that Rico Back and Moya Greenes overall fixed cash remuneration – their base salary, pension entitlements and benefits – are broadly the same. So, Rico Backs annual salary is higher than Moya Greenes to compensate for the halving of the cash pension allowance he would have received were this the same as the pension allowance Moya Greene received.”
Glass Lewis said that it tended to view high fixed pay levels “with skepticism”.
“We believe shareholders should question the appropriateness of the increase. In particular, we note that an increase to base salary has a compounding effect on the amount of short- and long-term incentives granted to an executive, since such awards are often granted as a fixed percentage of base salary,” they said.
Royal Mail said: “It is worth noting that the potential increase in Rico Backs variable pay is subject to meeting stringent performance conditions. The remuneration committee has committed to ensure that the performance conditions are suitably challenging. In the event that this extra pay is awarded, significant shareholder value would have been created.”
Royal Mail said Greenes termination payments were fixed from the period when it was still under public ownership.
Royal Mail was floated in 2013 in what was the biggest UK privatisation since the 1980s.