Richard Pennycook, the boss of the Co-operative Group, has asked for and will receive a 60% pay-cut despite helping to rebuild the company’s balance sheet and corporate reputation.
The group said with the “rescue of the Co-op” complete following years of scandals and almost financial collapse and the “rebuild well under way” that Pennycook had requested that his remuneration package be substantially reduced.
As a result, from July 1 this year Pennycook’s base pay will be cut from £1.25million to £750,000 and his long and short-term incentives also reduced so they are in line with approximately 80 senior managers in its Enterprise Leader group.
“Richard’s total remuneration will fall to a level well below the median for organisations of the scale and complexity of the Co-op,” the group said.
It is understood that Pennycook believes the pay cut is the “right thing to do for the business”.
The Co-op’s non-Executive Chair Allan Leighton said: “The move by Richard to reduce his pay shows the Co-op difference in action, as we champion a better way to do business for our members and communities.”
It comes as the Co-op revealed annual profits of £23million, down from £124million last time when it was boosted by £121million worth of disposals. Group revenues remained flat at £9.3billion.
Food sales grew 1.6%, with funeral sales up 9.9% boosted by the highest death rate since 2008. It plans to open another 200 funeral homes in the next three years, increasing the size of the estate to over 1,100 homes.
“Whether it’s our investment in lowering prices, rewarding colleagues or campaigning on key issues, we are taking the right steps and the performance of our businesses and the feedback from our members shows us we are on the right track,” said Pennycook. “We are, however, only one year into our Rebuild and whether it is driving further growth in our businesses, improving member engagement or getting back to our campaigning roots, there is still much to achieve.”
In addition, it revealed that Ian Ellis, group chief financial officer was appointed to the group board on April 6 and that members of its group executive division will now be on 6-month notice periods rather than the current 12 months.
This follows a previous decision by the Executive team to voluntarily reduce their pension contributions from 16% of salary to 10%.