Group board notes executive pay ‘concerns’

Delegates have backed a call to curb executive pay during a period of “austerity”. A motion from the Central and Eastern region expressed “concerns” over increases in remuneration...

Delegates have backed a call to curb executive pay during a period of “austerity”.

A motion from the Central and Eastern region expressed “concerns” over increases in remuneration at a time of “potential redundancies”. It was supported by 67% of delegates.

In March, it emerged that the Group’s remuneration committee had made plans to double the wage bill to £12m for the executive team. All executives were reported to be receiving a basic salary, with a matched retention bonus.

The motion also called for the future of St Paul’s, the Group’s London office, to be reviewed.

Speaking on behalf of the region and responding to claims of high executive pay, Chris Sumner said: “Do our shop workers get that sort of deal? I am not naive enough to expect that everyone will be paid the same, but for one person to be paid over 200 times more the majority of our employees, I don’t think so.

“We need a reminder that this is a democratic organisation, a representative democracy the same as national government. Most have been elected by membership – membership who are owners. We have the duty to ensure the interests of members are understood and adhered to.”

In response, the board said that controlling costs is not an “austerity measure”, but is “sound management”.

“Today, the Co-op does not manage its costs well,” said the board. “The processes, controls and systems of measurement are not performing well enough for us to be as efficient as we need to be.

“Ask any colleague member in the business and they will tell you about our overly complex, ineffective and broken processes and controls that they have to work with and manage every working day. This is something all our colleagues recognise. The Project Orion controls we had to put in place at the end of 2013 are a ‘sticking plaster’ while we go about redesigning the basics.”

In its response, the board also revealed that more details about a reward strategy connected to pay differences will be published in the future. “We aim to become a ‘median market total compensation employer at all levels’,” said the response. “We are now undertaking the modelling to understand where we are currently under- and over-achieving this ambition and what it would take to achieve this over all.”

In response to the London office question, the board said that Manchester is home of the business support teams, while a base in the capital will help to attract and retain key talent. On the St Paul’s House premises, the Group has taken a 15-year lease as well as the exit of two other buildings in the city.

The office will eventually house Co-operative Legal Services on the ground floor, while four floors will be sub-let to the Co-operative Bank, which is in the vicinity of the London Stock Exchange. Two smaller upper floors are earmarked for other London-based teams within the Group.

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