Co-op boss demands 60% pay cut – for himself!

By Noli Dinkovski

- Last updated on GMT

Pennycook: his reported £3M pay package will be slashed by 60%
Pennycook: his reported £3M pay package will be slashed by 60%

Related tags Chief financial officer Somerfield British co-operative movement The co-operative group

The head of The Co-operative Group has insisted on a 60% reduction in his overall remuneration package, after claiming the business was “on the right track”.

Chief executive Richard Pennycook requested that his base pay be cut from £1.25M to £750,000, and his long and short-term incentives also be reduced, so that they are in line with the reward available to the Co-op’s wider group of approximately 80 senior managers.

His total pay package – including salary and bonuses – was reported to be £3M.

The former Morrisons man has received the full backing of the board.

The development came as the Co-op announced a 1.6% increase in like-for-like sales across its 2,800 food stores for the 52 weeks to January 2, with like-for-like volumes up 5%.

Underlying profit for food stores rose 3.3% to £250M, driven by what the Co-op claimed were “strong sales and cost efficiencies”​.

Convenience boost

Like-for-like convenience sales were up 3.8%, buoyed by what the Co-op claimed was the consumer trend for buying “little and often”.

Overall turnover for the group – which also offers financial services and operates 1,000 funeral homes – fell marginally to £9.3bn, compared with £9.4bn in 2014.

Profit was £23M for the year, down from £124M in 2014, when the figure was boosted by a one-off gain of £121M from a one-off disposal.

Pennycook was hired by the Co-op as chief financial officer in 2013 after the Group was hit by the discovery of a £1.5bn hole in its banking division’s finances. In 2014, he was elevated to chief executive following Euan Sutherland’s resignation after 10 months in the job.

The bank was rescued by a group of investors and the Co-op now only owns 20% stake.

Year of further progress

According to Pennycook, 2015 had been a year of further progress at the Co-op, met by investment to drive further growth of the businesses.

“Underlying profits have increased but our priority this year has been on putting the building blocks in place for the long-term.

“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.”

He cautioned, however, that the company was only one year into its three-year ‘Rebuild’ programme, and “there is still much to achieve”​.

“We are championing a better way of doing business for our customers and communities, and working with our colleagues and members we’re confident that we have a strong plan to achieve our goals.”

The Co-op has also made a number of changes at board and executive level.  

Ian Ellis, chief financial officer, has also been appointed to the group board, taking up the previously vacant position.

Pippa Wicks has been confirmed as chief operating officer, a role she has held on an interim basis since 2014.

Lord Victor Adebowale, meanwhile, has been appointed as an independent non-executive director.

Richard Pennycook’s pay – at a glance

  • Insisted on a 60% reduction in his own pay package 
  • Opted for a voluntary pay cut from £1.25M to £750,000 
  • Total pay package – including salary and bonuses – reported to be £3M

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