FirstGroup chief executive Tim O'Toole has seen 42% of the transport group's shareholders vote against a retention share award. Photograph: Linda NylindTim O'Toole, the chief executive of FirstGroup, suffered a rare public rebuke on Friday after 42% of shareholders voted against the remuneration package at the public transport group.
O'Toole was lauded as one the UK's finest public servants when he stepped down as head of the London Underground in 2009, having won plaudits for steering the organisation through the aftermath of the July 7 bombings. However, the private sector proved less welcoming at O'Toole's debut annual meeting as FirstGroup chief executive after a bloc of shareholders appeared to take exception to a "retention" share award of nearly 215,000 shares. The award, worth around ?760,000 at Friday's share price, will be triggered if O'Toole is still at the helm of the owner of the First Great Western and First Capital Connect rail franchises, or is not working his notice, on 1 November 2013.
FirstGroup's annual report states that the award was made after consultation with the six largest shareholders in the company, including blue-chip investors such as Scottish Widows and Standard Life. However, the rest of the share register appears to have followed the guidance of ISS, the corporate governance adviser, which told investors to vote against the remuneration package because O'Toole's award came with few strings attached. ISS said FirstGroup had made the award because O'Toole had received "considerable" offers from US and UK rivals before deciding to join FirstGroup.
A FirstGroup spokesperson said: "We are disappointed with the result of the proxy voting in respect of the Remuneration Report. The Remuneration Committee consults with the Group's largest shareholders on relevant matters relating to the attraction, retention and remuneration of senior executives and will continue to do so in the future." FirstGroup said 42.6% of shareholders voted against the remuneration package while a majority of 57.4% voted in favour. O'Toole earned a total of ?591,000 last year, excluding a housing allowance of ?138,000.
FirstGroup shares rose 8.18% to 356p on Friday as the rail, bus and coach operator said sales in its rail business rose 8.5% in the three months to 30 June and its bus division saw a 0.7% rise in like-for-like sales. The group added that it had made "good progress" in its main problem area, its US school bus division, while revenues at its US Greyhound coach unit grew by 3.7% in the first quarter.
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