Co-op chief takes 60% pay cut

The-Co-operative-Cooperative-Bank-700x450.jpgCo-operative Group chief executive Richard Pennycook has asked board members to cut his pay package bu 60 per cent.

Pennycook took over the Co-op in 2014, branding the £2.5bn losses at the company a “disaster”.

Pennycock has asked for his total compensation – including bonuses and pensions – to be reduced by over 60 per cent, saying it is “the right thing to do”.

The move will see the chief executive’s basic salary cut from £1.25m to £750,000. The maximum annual incentive plan will be reduced from 100 per cent of base salary to 40 per cent, while the maximum for his long-term incentive plan will be reduced from 100 per cent to 50 per cent.

In 2014 he received a total of £2.5m remuneration. However, his pay for last year was due to rise to £3m because of a larger annual bonus.

Under the new model the maximum Pennycock could be paid is £1.5m, with a minimum of £839,000.

Pennycook took over from Euan Sutherland, who quit following revelations of his pay package.

The group executive committee has also voluntarily reduced their pension contributions from 16 per cent of salary to 10 per cent, in order to bring them into line with less senior colleagues.

The Co-op’s woes began in 2013 as its banking division made huge losses and its chairman Reverend Paul Flowers was embroiled in a drugs scandal.

The group turned 2013’s £2.3bn loss into a £216m profit the following year.

However, in results published last week it was revealed the banking business made a pre-tax loss of £610m in 2015. This was driven by legal charges of £193m resulting from missold payment protection insurance.

At the start of this year the PRAfined and banned for life former Co-op bank chief executive Barry Tootell and managing director Keith Alderson.