Co-op boss to get £3.6m pay package
The Co-operative is to hand a £3.6 million pay deal to its chief executive, despite facing a £2 billion loss after the biggest crisis in its history.
The mutual argues that Euan Sutherland's proposed remuneration package will be in line with comparable firms and reflects the scale of the task he faces.
But the pay award comes at a time when the group is facing large-scale job cuts after a disastrous year in which its banking arm needed rescuing due to a £1.5 billion hole in its balance sheet.
According to the Observer, Mr Sutherland will receive a base salary of £1.5 million this year, plus a £1.5 million retention payment. He joined the company in May last year, having been chief operating officer of B&Q owner Kingfisher.
With pension contributions and compensation for buying him out of his previous contract, he will receive £3.66 million this year. His predecessor, Peter Marks, received just over £1.3 million last year.
Richard Pennycook, the chief operating officer, will receive a £900,000 salary and a retention payment of £900,000. Six other executives will be paid salaries between £500,000 and £650,000 - and the same amount in retention.
The group is reportedly set to announce losses of £2 billion later this month, having seen its banking arm fall under the control of bondholders.
Ursula Lidbetter, chairwoman of the Co-operative Group, said the business had just faced the biggest crisis in its 150-year history.
She added: "We saved the bank, without recourse to the taxpayer and we are now embarking on the long and complex journey to revitalise the wider group. That means reducing debt, improving performance and streamlining a business that had become grossly inefficient.
"It is against that backdrop that we recruited Euan Sutherland and a top team with the skills and experience needed at this crucial stage in our history, reflecting the necessity for change.
"The remuneration packages of our executives are in the middle of a range of comparable companies. This represents an increase on the pay of their predecessors to reflect the greater commercial, management and turnaround experience they are bringing to bear.
"Euan and his team have already made a significant contribution to The Co-operative Group and we are confident that they will continue to do so."
Other businesses in the Co-op group include funeralcare, legal services, travel and general insurance. It plans to sell its farming assets and will also consider the future of its pharmacy business.
Shadow Chief Secretary to the Treasury Chris Leslie said the proposal was "very disappointing".
"I believe in mutuality, I believe in the co-operative principle. But I happen to think Co-op should be acting differently.
"They have some big challenges and I hope they can overcome those and I support them in doing that.
"But they recently put out a questionnaire to the public about their objectives and I didn't see in that questionnaire anything about 'do you agree with extending high remuneration for senior executives'.
"So I have to say it is a bit disappointing."