Pearson risked a fresh row with shareholders over executive pay as the education publisher revealed it will hand its new boss a £13million ‘golden hello’.
Microsoft executive Omar Abbosh will take the top job at the FTSE 100 company after current boss Andy Bird announced his retirement after just three years as chief executive.
Abbosh will receive £13million worth of cash and shares on top of his £1million annual salary as compensation for leaving Microsoft.
But the move could rile investors. Pearson shareholders twice revolted over Bird’s pay, once ahead of his appointment in 2020 and again in 2021, resulting in the exit of chairman Sidney Taurel.
Bird, a former Disney executive, was handed an annual package of up to £5.9million and a ‘golden hello’ worth £7million when he joined the company.
In the money: Incoming Pearson boss Omar Abbosh (pictured) will receive £13m worth of cash and shares on top of his £1m annual salary as compensation for leaving Microsoft
High Pay Centre spokesman Andrew Speke said: ‘Given that Pearson has faced shareholder revolts in the past for their approach to executive remuneration, this new pay package announcement gives the appearance that the board and remuneration committee haven’t really been paying attention.’
As well as the £13million handout, Abbosh will get £249,050 to compensate him for missing out on his Microsoft bonus after his resignation.
He will be eligible for Pearson’s bonus scheme from next year with a maximum pay out of 300 per cent of base salary, or £3million.
Pearson has faced criticism in the past for awarding Bird’s predecessor John Fallon double-digit pay rises and huge bonuses despite the company making a loss.
Shares in Pearson fell 5 per cent in early trading yesterday on the news that media industry veteran Bird will retire.
They later closed 1 per cent down at 875p.
The company’s share price has risen more than 60 per cent under Bird’s leadership following a tumultuous few years as it adapted from selling textbooks through book shops to online courseware.
Hargreaves Lansdown analyst Sophie Lund-Yates said: ‘Bird hasn’t been in the top job for too long, but it’s been long enough to oversee a significant transformation of Pearson’s priorities in its bid to secure a more tech-focused future.
‘That said, investors rarely like to see a respected leader say goodbye.’ She added that Abbosh’s tech background means the board is ‘doubling down on plans to propel the education specialist into the next – very digital – chapter’.
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