Rebel investor to fight pay rise for FirstGroup boss - UPDATE

30th Jun 2014 09:44

Rebel investor Sandell Asset Management is planning to fight a near-doubling of the pay package received last year by FirstGroup Chief Executive Tim O'Toole, claiming he is being "rewarded for failure".Sandell, which has previously demanded the sale of First's US Greyhound coach operation and the spin-off of the rest of its US business, said it planned to vote against the transport group's annual remuneration report and it would encourage other shareholders to do the same.The investor, which owns about 3.1% of First, said O'Toole had received a 209% rise in the past five years.But First's shares were the worst in its peer group, returning -8% compared to +231% for its peers, which it said was an under-performance of 239%, Sandell explained.In a letter to First's Chairman John McFarlane, Sandell's Chief Executive Tom Sandell said: "Given that the incumbent management team has presided over both operational and share price decline at FirstGroup, we were also surprised and disappointed to find that its members have been so well rewarded for failure."We simply do not believe that a 94% rise in remuneration package is deserved for Mr O'Toole's 2013/14 performance."Sandell also hit out at what it described as a lack of sector expertise in the management of the company's US operations First Student and First Transit.O'Toole's total package rose to just under £2m in 2013/14 from just over £1m in 2012/13 as a result of the vesting of a "retention award" of £324,000 granted in 2011 and a bonus of about £600,000, plus other items.But a FirstGroup spokesman pointed out that O'Toole's pay has been frozen at £846,000 a year for three years and he declined a bonus in 2011/12 and 2012/13.FirstGroup, which runs buses across Britain and also has five UK rail businesses.recently failed in bids for three British rail franchises, including its attempt to keep its First Capital Connect London franchise and efforts to win the Essex Thameside and Scottish sleeper contracts.Shares in FirstGroup fell 1.3p or 1% to 128.8p at 10:44 in London.PW