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FirstGroup chief's pay doubles to £2m

FIRSTGROUP chief executive Tim O'Toole has seen his pay double to almost £2 million in a year after the business got investors to back a £615m fundraising.

INCENTIVE: Tim O'Toole's pay package includes a bonus of £600,000 and 'retention share award'. Picture: Getty Images

The company recently lost two rail franchises, the Caledonian Sleeper and the Thameslink, Southern and Great Northern in London, and is facing tough competition for the renewal of the Scotrail service.

The FirstGroup annual report, published yesterday, shows Mr O'Toole's remuneration was boosted after he elected to take a bonus payment after two years of declining them.

As a result the £1.99m is the highest annual sum the experienced transport executive has received since he took the helm at the Aberdeen company in November 2010.

He received £357,000 for his first five months in the job, £1.06m in his first full year then £1.07m for the following one.

The latest report, which covers the 12 months to March 31, 2014 where First posted a 23 per cent rise in underlying pre-tax profits to £111.9m, showed Mr O'Toole's basic pay was flat at £845,625.

But his total package was increased as he decided to accept a bonus worth £600,000, which was 59.1 per cent of the maximum available to him.

Alongside that the remuneration section in the annual report states Mr O'Toole received a retention share award valued at £324,000.

That was given in 2011 following consultation with large shareholders as a way to encourage Mr O'Toole to stay in his job and vested towards the end of last year.

Finance director Chris Surch, who joined in September 2012, got a total of £807,000, which was up from £727,000 although that included a one-off cash bonus of £237,000 to compensate him for leaving his previous job at Shanks Group.

Mr Surch's base salary was flat at £450,000 but his annual bonus increased from £173,000 to £266,000.

A FirstGroup spokesman said: "Our executive directors saw their basic pay frozen in 2013/14, as it has been for the past two years, and received just over half of their potential bonus.

"This is the first annual bonus that Tim O'Toole has taken since he became [chief executive] and reflects the progress the Group has made.

"As we continue to work through our transformation programmes, we are encouraged by progress towards our medium-term targets so far, although there remains a significant amount of work ahead."

In June last year First Group got backing from 96.5 per cent of shareholders for its cash call while also warning it would not be paying a dividend. The money was to be used to pay down debt and invest in operations.

According to the report Mr O'Toole, a former London Underground boss, has more than 685,000 FirstGroup shares and has share options for close to two million more.

Chairman John McFarlane received £66,000 for the four months he was a member of the board between December 5, 2013, and March 31 this year. The accounts state Mr McFarlane elected to take his fee in shares.

He will receive £250,000 for the current year, up from £191,000, after the remuneration committee approved a rise in non-executive fees.

Basic fees are increasing from £50,000 to £52,500.

Former chairman Martin Gilbert, who left the board on December 31, received fees of £143,000.

In the annual report remuneration committee chairman David Begg said: "With the challenges ahead, it is as important as ever to ensure that we have in place the highest quality management motivated to deliver outstanding performance.

"However, we strongly support the view that failure to deliver should not be rewarded."

He confirmed the basic salaries of executive directors would not be increased while the maximum available under the long-term incentive plan would remain at 120 per cent of salary. He added: "Remuneration practice has been restrained over the most recent difficult trading years."

Shares in FirstGroup closed down 1.1p - or 0.8 per cent - at 133.5p.

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