The Co-operative Group is reportedly set to award its senior staff huge boosts to salaries and bonuses, despite suffering the worst crisis in its 150-year history.
Confidential documents prepared for the group’s remuneration and appointments committee showed that its new executive team are to receive bonuses in line with FTSE-100 companies of a similar size – regardless of the near-failure of its banking division and recent scandals surrounding former chairman Paul Flowers.
Under the proposals, revealed today by the Observer, new chief executive Euan Sutherland will receive a base salary of £1.5 million this year, plus a retention payment of £1.5 million. With other extras included he will receive a total of £3.66 million – by contrast, his predecessor Peter Marks received £1.3 million last year.
Other executives in Mr Sutherland’s team will take home amounts similarly inflated beyond what was being paid out in the past – between £500,000 and £650,000 compared to between £200,000 and £400,000.
The mutual argued that the proposed packages reflect the scale of the challenge faced by executives, as well as being in line with comparable firms.
The group is reportedly set to announce losses of £2 billion later this month, having seen its banking arm fall under the control of bondholders.
Ursula Lidbetter, chairwoman of the Co-operative Group, said the business had just faced the biggest crisis in its 150-year history.
She added: “We saved the bank, without recourse to the taxpayer and we are now embarking on the long and complex journey to revitalise the wider group. That means reducing debt, improving performance and streamlining a business that had become grossly inefficient.
“It is against that backdrop that we recruited Euan Sutherland and a top team with the skills and experience needed at this crucial stage in our history, reflecting the necessity for change.
“The remuneration packages of our executives are in the middle of a range of comparable companies. This represents an increase on the pay of their predecessors to reflect the greater commercial, management and turnaround experience they are bringing to bear.
“Euan and his team have already made a significant contribution to The Co-operative Group and we are confident that they will continue to do so.”