Shares in the Royal Mail (RMG.L) fell by almost 1.5% on Friday after the company unexpectedly announced that chief executive Rico Back had stepped down “with immediate effect” after less than two years in the job.
Back battled with unions over pay at the 500-year-old group, faced shareholder revolts over his compensation, and saw the company relegated from the blue-chip FTSE 100 index (^FTSE).
The company said on Friday that he would be replaced in an interim capacity by Keith Williams as executive chairman and Stuart Simpson as chief executive.
“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,” Back said.
“Rico Back has made a significant contribution to the evolution of our business over his 20 years with us, particularly in building our international parcels business and developing our group strategy, which recognised the urgent need for change to create a sustainable business for the future,” Williams said in a statement.
Back had controversially received a £6m "golden hello" on becoming the group's CEO in 2018. His departure comes as the firm faces a huge surge in costs and falling revenue due to the coronavirus crisis.
Costs in its UK parcels, international, and letters (UKPIL) business climbed by £40m (£49m) in April, due to overtime and agency fees related to “high levels” of employee absence, social distancing measures, and the cost of acquiring personal protective equipment for workers (PPE).
Compared to the same month last year, revenue in the UKPIL business fell by £22m in April, following a “substantial switch” from letters to parcels in the UK.
UK parcel volume rose by 31% and revenue climbed by 20%, even as there were 308 million fewer addressed letters in the month, pushing letter revenue down by 23%.
“Royal Mail is continuing to deliver to 30 million households across the UK, fulfilling a vital role with respect to the collection and delivery of parcels, home testing kits and government information,” the company said on Friday.
The company warned that there was “significant volatility” in parcel volumes as the coronavirus pandemic spread across its key markets.
Shares in the group fell to a record low in February, after it warned that the industrial relations environment and UK economic uncertainty could prompt continued losses in one of its key divisions.
The company bemoaned the decision of the Communication Workers Union (CWU) to ballot its members for strike action, saying that it could delay progress on its 2024 turnaround plan.