Under-fire Back steps down at Royal Mail

Jo Francis
Friday, May 15, 2020

Royal Mail has parted company with controversial CEO Rico Back with immediate effect.

Rico Back: began and ended his tenure as CEO amid controversy
Rico Back: began and ended his tenure as CEO amid controversy

Back, who took over the top job two years ago, had been under fire from union leaders over his decision to remain at his home in Switzerland during the Covid-19 crisis.

He previously ran Royal Mail’s GLS business, and there was also outrage when he received a £6m ‘golden hello’ when he succeeded Moya Greene as CEO.

In a statement this morning (15 May), Royal Mail said that Back and the board had agreed he would step down “with immediate effect”.

Royal Mail CFO Stuart Simpson become interim CEO while the search for a permanent successor is underway. Chairman Keith Williams becomes interim executive chairman.

In a statement, Back stated: "It has been a privilege to lead a company that is so much a part of UK life at this crucial time in its history. I am proud of what I, together with our dedicated and loyal team, helped to build in Royal Mail and GLS. I look forward to seeing Royal Mail transform into a parcels-led, international delivery company, that continues to touch the lives of millions across the world."

Union the CWU, which had been a vocal critic of Back during his tenure, responded to news of his departure: “The change of CEO by Royal Mail Group must now bring about a total change in strategy and direction. Postal workers have been outstanding during this pandemic and are ready to embrace innovation, new products and building on their role in every community in the UK.

“It is absolutely critical that the new CEO wants to work with the CWU to overcome the challenges we all face and deliver the postal service the public and our members deserve.”

In a trading update, Royal Mail said that letter volumes fell by 33%, the equivalent of 308m items, during April.

Year-on-year sales at its UKPIL business were down £22m for the month, while costs increased by £40m due to Covid-19.

Royal Mail said the increase was "driven by overtime and agency resource costs due to high levels of absence, the introduction of social distancing measures and PPE."

Absence levels peaked at more than 20%, but were now at 11%. The group has allocated £40m to spend on PPE items.

It has also set aside around £25m to pay bonuses of up to £200 to frontline staff who have worked throughout the crisis. No bonuses will be paid to executive directors this financial year. 

Fewer than 200 employees are currently on the government furlough scheme.

Royal Mail also reported a “substantial switch” from letters to parcels in the UK, with parcel volumes up 31% and sales up 20%.

It is working on a package of potential measures, with more details to be announced next month along with its year-end results.

The group said it was looking at ways to mitigate the impact of Covid-19, minimise losses in UKPIL, and “ensure a sustainable long-term business”.

Back is now on gardening leave until 15 August, but is not leaving the business empty-handed.

He will receive his usual salary and benefits until the departure date, followed by nine equal monthly payments, totalling £480,000, for pay in lieu of notice.

These payments will be reduced by any alternative paid employment that Rico Back receives,” Royal Mail said.

Back will also receive a capped contribution of £50,000 (excluding VAT) “towards legal fees incurred in connection with his departure”, and a capped contribution of £25,000 (excluding VAT) “towards outplacement support”.

Royal Mail has continued to deliver mail to 30m UK households during the Covid-19 lockdown, with deliveries currently reduced to five days a week.

Saturday deliveries are scheduled to resume on 13 June.

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