Co-op Group chief’s voluntary pay cut

The Co-operative Group has announced that chief executive Richard Pennycook is to take a voluntary 60% pay cut. From 1 July, Mr Pennycook’s base salary will drop from...

The Co-operative Group has announced that chief executive Richard Pennycook is to take a voluntary 60% pay cut.

From 1 July, Mr Pennycook’s base salary will drop from £1.25m to £750,000. Alongside this, his maximum Annual Incentive Plan (AIP) award is to be set at 40% of base salary and his maximum Long Term Incentive Plan (LTIP) will be set at 50% of base salary. Both of these are currently at 100%. The reductions will take effect from the next LTIP and AIP cycles, starting in 2017.

Co-operative Group on track to recovery, while CEO cuts salary

Group chair Allan Leighton said the cut had been proposed by Mr Pennycook himself, who approached the board with the suggestion.

The Co-op Group's head office at One Angel Square in Manchester.
The Co-op Group’s head office at One Angel Square in Manchester.

“We were in a big phase of rescue,” he said. “That’s largely done. We’re moving into a phase of rebuild. [The pay cut] reflects the type of situation we’re in,” said Mr Leighton, adding the move showed how the Co-op Group was “different” from other organisations.

Asked whether it meant Mr Pennycook had previously been paid too much, Mr Leighton said that everyone was paid “accordingly” for rescuing the organisation.

Retail chief executive Steve Murrells described staff pay as another focus of improvement.

Mr Murrells spoke of how pay increases had been announced and implemented before the government’s recent commitment to a National Living Wage, saying: “We want to keep doing the right thing with colleagues’ pay.”

The lowest hourly rate for Co-op employees is now £7.28 per hour for everyone over 18. The current national minimum wage is £5.30 for 18-20 year olds; £6.70 for 21-24 year olds; and £7.20 for over 25s.

Three quarters of social enterprises pay the Living Wage

But the Group’s lowest wage is still below the Living Wage Foundation’s recommendation of £8.25 an hour (£9.40 in London).

Responding to queries over Mr Pennycook’s pay cut, and whether it should start a trend among other chief executives in their attitude to salaries and overpayment, Mr Leighton refused to make judgments. “We’re a co-op, we do take that seriously,” he said.

“[The pay cut] is a reflection of pay in our organisation. It’s not a marker for everyone else, it’s a marker for co-operatives.”

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