Daily Times

The boss of the Co-op Group has asked for a £500,000 pay cut. Starting in July, chief executive Richard Pennycook’s basic salary will fall from £1.25m to £750,000. At first glance, this may seem a little crazy – if your company’s board of directors is prepared to pay you that much, why take less? But sometimes there can be legitimate business reasons to volunteer for a smaller pay packet, even if you are not a senior executive. Mr Pennycook said that long days and weekends working away from his family at the office last year had justified his £3.6m total take-home pay in 2015. “We’ve been through a difficult period which was very intense and I hope members would regard my remuneration as having been appropriate for that time,” he told the BBC. But now, according to Co-op chairman Allen Leighton, the company’s continued recovery represents an opportunity for his chief executive to take a pay cut. ‘Refreshing lesson’: Mr Pennycook has subsequently suggested he should not be held up as an example for other top executives. But Simon Walker, head of the Institute of Directors (IoD), called the decision “refreshing” and said the move should serve as a lesson for other company chiefs. “The proactive steps taken today by Mr Pennycook and the Co-op’s board should be a wake-up call to other companies,” he said. “Being open, honest and transparent about the salaries of senior executives can go a long way to restoring public trust in British businesses.” Top executives faced withering scrutiny about their pay during the 2008 financial crisis, prompting a growing public examination of the relationship between chief executives’ compensation and company performances. The Co-op’s boss seems to be bucking the trend in this respect. Corporate bosses, particularly in the banking sector, have fought a rearguard action against losing their bonuses after the financial crisis caused a backlash against corporate largesse. Prof Chris Roebuck of London’s Cass Business School lectures on leadership and says Mr Pennycook has set an example “others should follow”. “Creating a ‘we not me’ culture actually makes more money than a ‘me not we’ one.”