Leaked remuneration plans ‘antithesis of Co-operative values’
The HR director at the Co-operative Group, Rebecca Skitt, is reportedly inline to receive an exit payoff worth more than £2 million despite being in the post for less than a year, after the organisation’s draft remuneration report was leaked to a national newspaper.
Skitt was informed she would be “exited”, but not dismissed, last month and that to ensure minimal disruption and a “clean break” she would be paid her full retention payment, according to the Observer newspaper.
In addition to this golden goodbye, the group’s remuneration committee recommended increasing the wage bill for the senior executive team to £12 million a year because they faced a “complex” job and the rise would ensure salary levels that were appropriate for an organisation of the Co-op’s size.
Pay consultants hired by the group proposed that chief executive Euan Sutherland be paid a base salary of £1.5m this year with an additional £1.5m retention payment. With pension contributions and other rewards, for example the compensation paid for buying him out of his previous contract, Sutherland is set to receive £3.66m this year. In comparison, the previous chief executive Peter Marks took home £1.3m last year.
However, Sutherland’s enlarged pay packet is not a one off as current chief operating officer, Richard Pennycook, will also receive a huge salary of £900,000 plus a retention payment of £900,000. Six further senior executives will collect salaries between £500,000 and £650,000 with the equal sum paid in retention. Previous payments for senior executives at the organisation were set much lower between £200,000 and £400,000.
Sutherland responded to criticism of the reward hikes in a statement to Co-op employees and elected members: “The executive and board directors are working our way through significant changes made necessary by very poor decision making in the past. Along the way we are making sure that the widest possible consultation takes place and that rigorous debate and challenge is allowed and encouraged.”
He also said that the remuneration report had not yet been finalised. The final version will be published at the same time as the group’s annual results on 26 March.
However, Jon Mann MP, a 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.”
And Lord Oakeshott, 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 group was hit by scandal earlier this year when the chairman of Co-op bank was arrested in connection with the purchase and use of drugs. Prior to this the bank itself had faced a £1.5 billion capital shortfall which required financial support from its parent group and the sale of bonds as part of a ‘bail-in’ to rescue the bank.