Huge payouts for Co-op’s new bosses condemned as ‘antithesis of its values’
Troubled group provokes fury of Labour after bumping up rewards for turnaround team
Monday 10 March 2014
Co-operative Group is facing a fierce backlash after it emerged that the troubled banking-to-supermarkets organisation is set to hike its new chief executive’s pay package to £3.66m.
Leading politicians said they were “deeply disturbed” by the “gigantic golden hellos” for Euan Sutherland and other executives, who have been recruited to turn around the Co-op after it admitted last year it had a £1.5bn black hole in its finances.
Mr Sutherland is in line for a £1.5m base salary and £1.5m retention payment, plus other perks, after he quit as chief operating officer of B&Q owner Kingfisher to join the Co-op last May. His predecessor, Peter Marks, earned only £1.3m last year.
Group finance director Richard Pennycook, who was brought in from the supermarket chain Wm Morrison, is to get a salary of £900,000 and retention payment of £900,000 – also well above that of his predecessor.
Former human resources boss Rebecca Skitt is also said to have got a £2m pay-off in February after working at the Co-op for one year.
Jon Mann, a Labour MP and member of the Commons Treasury Select Committee, told The Independent: “It is an absurdity that failure results in huge pay rises. This is the antithesis of Co-operative values.”
The row has political implications because the Co-op, which is owned by millions of members, has close links to Labour and provides financial support for dozens of MPs.
The group has already been badly tarnished after the bank’s former chairman, the Rev Paul Flowers, who used to chair the group’s remuneration committee until last June, was arrested over allegations involving drugs. Those close to the Co-op insisted Mr Flowers was not involved in setting the pay of Mr Sutherland.
Barry Sheerman, the Labour and Co-operative MP for Huddersfield, said he was “deeply disturbed” by the news of Mr Sutherland’s pay deal and wants him to meet MPs with Co-op links this week.
Lord Oakeshott, the Liberal Democrat peer and former Treasury spokesman, said: “Gigantic golden hellos for the new bosses send the wrong message to millions of loyal members, customers and staff. Of course, managers should be well rewarded – when they’ve turned the business round sustainably.”
The row will turn up the heat on Co-op chair Ursula Lidbetter and recently appointed senior independent director Lord Myners, a City minister during Gordon Brown’s government and former chairman of Marks & Spencer. One of Lord Myners’ first tasks at the Co-op has been to review governance but not pay.
Ms Lidbetter said: “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.” She added that experienced new managers were required after the Co-op’s emergency fundraising, which she described as “the biggest crisis in its 150-year history, with the need to recapitalise its bank”.
The Co-op is expected to post an annual loss of over £2bn later this month.
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