Belfast Telegraph

Pearson chief executive enjoys 20% pay boost despite record loss

Pearson has pushed its chief executive's pay packet up 20%, despite the publisher posting the biggest loss in its history.

The group boosted John Fallon's base salary from £776,000 to £780,000, and shelled out an extra £343,000 for his annual incentive plan, helping the chief exec's total pay climb to £1.5 million.

This compares to £1.26 million last year.

It follows dismal annual results in February, which included a £2.5 billion impairment charge, pushing the former Financial Times owner to a record £2.6 billion loss.

Pearson has also issued a string of recent profit warnings, its latest coming in January.

The company's remuneration committee defended its payout plan, saying it had "exercised its discretion to reduce incentive payment payouts".

It said it had cut its annual incentive plan funding by 20% and decided to not increase the base salary for either Mr Fallon or the chief financial officer.

"Pearson is undergoing substantial change as the company delivers on digital transformation and continuously improving efficiency, while at the same time meeting the needs of all our stakeholders.

"This requires strong and resilient leadership and our policy proposals are designed to provide the appropriate balance of reward for performance and accountability," the committee's chairman Elizabeth Corley said in the annual report.

However, shareholders will be given a chance to have their voices heard at the company's annual general meeting on May 5.

It may be the next company in line for a shareholder revolt as the AGM season gets underway.

Housebuilder Crest Nicholson saw 58% of its voting shareholders reject its remuneration report earlier this week after its remuneration committee slashed the profit targets that help determine performance-based bonuses for its directors, citing challenging trading conditions.

Last year, bosses of mining giant Anglo American, advertising behemoth WPP and oil major BP all faced investor anger over ballooning pay packets.

Pearson shares have been hovering near seven-year lows since its January profit warning, when it also announced plans to sell its publishing unit Penguin Random House.

It now expects operating profit in 2017 of between £570 million and £630 million.

Rather than pocketing the extra cash, Mr Fallon will use his pay awards to buy extra stock, a Pearson spokesman said.

"After paying tax, and subject to the usual share-dealing rules, John Fallon intends to use his full bonus payment to purchase shares in the company."