Royal Mail shareholders vote against new CEO's pay package

At the annual general meeting earlier on Thursday, 70% of shareholders voted against the directors' remuneration report.

As the AGM vote is merely advisory, new chief executive Rico Back - who plans to commute to the UK from Zurich for his job - will still receive his basic salary of £640,000, which is £100,000 more than his predecessor, Moya Greene.

Ahead of the vote, shareholder advisory firms ISS and Glass Lewis had called on shareholders to reject the pay deal, partly because it's higher than Greene's.

Orna Ni-Chionna, chair of the group’s remuneration committee, said: "We are fortunate to have secured a group CEO with Rico's track record, unparalleled knowledge of our company and industry experience. Under Rico's leadership, GLS has become the leading delivery company of its kind in Europe.

"In our engagement with shareholders, we explained that the retiring CEO's and the incoming CEO's overall fixed cash remuneration - their base salary, pension entitlements and benefits - are broadly the same. The incoming CEO's pension entitlement is lower and the salary is higher than the retiring CEO. We did not feel it was appropriate to reduce the fixed pay for this very demanding role. Any potential increase in Rico Back's variable pay is subject to meeting stringent performance conditions. Those performance conditions are challenging. In the event that this extra pay is awarded, significant shareholder value would have been created.

"We believe that this approach is aligned with our focus on aligning pay to performance and reflects the responsible position we have taken on this key issue."

Shareholders were also concerned about Royal Mail's payments to Moya Greene on her exit from the company.

At 1525 BST, Royal Mail shares were down 0.3% to 466.20p, having risen on Wednesday following the release of first-quarter results.