MPs demand answers over Royal Mail boss's £5.8m 'golden hello' payment

Rico Back, who will commute to his job from Switzerland, is also receiving a salary 17% higher than his predecessor's

Last week, at Royal Mail’s annual general meeting in Sheffield, 70 per cent of shareholders rejected the pay deal (Reuters)

MPs have written to the Royal Mail board demanding answers about a £5.8m payout to new chief executive Rico Back after 70 per cent of the privatised company’s shareholders rejected his remuneration.

Rachel Reeves, chair of the Business, Energy and Industrial Strategy Committee, said she was “surprised” to learn about the fee Royal Mail is paying to Mr Back, which was disclosed only as a note on the company’s accounts, not in its remuneration report.

In a letter to Orna Ni-Chionna, chair of Royal Mail’s remuneration committee, Ms Reeves asked why the company was also paying Mr Back 17 per cent more in basic salary than his predecessor Moya Greene.

Royal Mail argued that Ms Greene was paid more in pension contributions so the overall fixed remuneration was the same, but it conceded that Mr Back “could get more overall compensation than Moya, because annual and long-term bonuses are calculated on salary".

Mr Back’s total remuneration this year could be up to £2.7m, in addition to the £5.8m he is being awarded on joining the company. Ms Greene is pocketing a £900,000 “golden parachute” payment.

Last week, at Royal Mail’s annual general meeting in Sheffield, 70 per cent of shareholders rejected the pay deal.

Responding to the non-binding vote, the board said it would consult further when it reviews its remuneration policy later this year.

Ms Reeves said: “At a time when there are ever louder criticisms of hikes in executive pay, it seems incredible that the [Remuneration Committee] chair would sign off on such a pay deal.

“Why was it considered necessary to pay such a transfer fee for the new CEO? Royal Mail have made no real attempt to explain why this is the case.

“When there is a pay-revolt featuring 70 per cent of shareholders and the company looks to plough ahead anyway, there is bound to be reputational damage.

“Grudgingly admitting to a failure of communication goes little way to justifying these pay arrangements. Executive pay needs to be fair and it should reflect the views of its shareholders.”

The BEIS Committee is currently undertaking an inquiry into executive pay and will be holding further evidence sessions in the autumn.