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Britain's Co-Op Group chief Richard Pennycook asks for 60% pay cut as job gets 'easier'

Mr Pennycook requested a cut in base salary from £1,250,000 to £750,000, as well as a cut in incentive payments. A series of illness outbreaks in many of Chipotle Mexican Grill's restaurants sickened customers and sent its share price tumbling. Tot
Mr Pennycook requested a cut in base salary from £1,250,000 to £750,000, as well as a cut in incentive payments.
Mr Pennycook requested a cut in base salary from £1,250,000 to £750,000, as well as a cut in incentive payments. A series of illness outbreaks in many of Chipotle Mexican Grill's restaurants sickened customers and sent its share price tumbling. Tot
A series of illness outbreaks in many of Chipotle Mexican Grill's restaurants sickened customers and sent its share price tumbling. Total pay for its two CEOs, Mr Monty Moran and Mr Steve Ells, fell by more than 50 per cent each.PHOTO: REUTERS

He helped British group out of crisis and says pay should reflect change from rescue operation to rebuilding

Mr Richard Pennycook hit the headlines last week for doing the unexpected. The head of Britain's Co-Op Group asked for a 60 per cent cut in his pay because his job just got "easier".

The news made waves on a day when other reports on compensation packages were being announced for chief executives around the world, including one from Germany which claimed that top executives of the embattled carmaker Volkswagen had refused to forgo their bonuses.

Co-Op Group business was now back "in calmer waters", Mr Pennycook said, justifying his request a cut in base salary from £1,250,000 (S$2.4m) to £750,000, as well as a cut in incentive payments.

Mr Pennycook took over as chief executive in 2014, when the group's banking arm was going through a financial crisis. He had a total pay package of £3 million at the time.

After a three-year plan to steady the business - which includes 2,800 food stores, 1,000 funeral homes and financial services - bore fruit, Mr Pennycook decided that his pay should reflect the values of the group since his job had changed from a rescue operation to rebuilding. He credited the group's 70,000 staff for the turnaround.

Chairman Allan Leighton said Mr Pennycook had earned every penny of his former salary.

In neighbouring Germany, weekly magazine Der Spiegel reported last Thursday that despite prescribing belt-tightening for their workforce in the wake of the massive emissions-cheating scandal, Volkswagen top executives are refusing to forgo their bonuses this year.

Spiegel quoted unnamed sources to report that board members made it clear, shortly before the supervisory board decision on executive board pay, that they would agree to a cut but not to let go their bonuses altogether.

A Volkswagen spokesman dismissed the magazine article as pure speculation, saying: "The management board is determined to set an example when it comes to the adjustment in the bonuses."

VW's former chief executive Martin Winterkorn received a bonus of more than €3 million (S$4.6 million) a year ago, while its former finance chief Hans-Dieter Poetsch pocketed nearly €10 million as "compensation" for the lower pay he would receive in his new role as head of the supervisory board, Spiegel reported.

Meanwhile, across the Atlantic, median pay for chief executives of nearly 300 large publicly traded companies in the United States fell sharply last year than any year since the financial crisis, according to data analysis by The Wall Street Journal.

The WSJ analysis, using data from MyLogIQ, found that pay slipped 3.8 per cent to US$10.8 million (S$14.5 million) last year from US$11.2 million in 2014.

"Increases in CEO pay have taken a bit of a pause," said Mr John Roe, head of advisory services at ISS Corporate Solutions.

Where pay is rising, Mr Roe noted, "it's in the places shareholders like to see it coming from most: It's in equity".

Slower growth in pension values was the reason behind many of the overall declines in pay, said WSJ which analysed CEO compensation and performance data for S&P 500 companies that disclosed pay details for their 2015 fiscal years between July 1, 2015, and March 31, 2016.

Among those whose compensation package slid was chief executive of 3M Inge Thulin, whose pay declined 3.4 per cent to US$19.4 million.

Some had big pay cuts on performance woes. The co-CEOs of Chipotle Mexican Grill lost their bonuses after a series of illness outbreaks in many of its restaurants sickened customers and sent its share price tumbling.

Total pay for the two CEOs, Mr Monty Moran and Mr Steve Ells, fell by more than 50 per cent each, to US$13.5 million for Mr Moran and US$13.8 million for Mr Ells.

There were big pay cheques for Google chief executive Sundar Pichai who was paid US$110.5 million last year, while Mr Satya Nadella of Microsoft took home US$18.3 million.

And of the 17 women on the index, all but two made more than the S&P 500 median. The highest-paid of them was Oracle co-CEO Safra Catz, with US$53.2 million. Her fellow co-CEO made about US$1,500 more than she did.

A version of this article appeared in the print edition of The Straits Times on April 11, 2016, with the headline 'Co-Op chief asks for 60% pay cut as job gets 'easier''. Print Edition | Subscribe