The former chairman of FirstGroup gave his unqualified support for the chief executive of the transport giant as it faces criticism over pay and management at its meeting with shareholders today.
Martin Gilbert, who stepped down from the board as chairman of the First board after 18 years said he felt “sorry” for Tim O’Toole, who has come under fire after it emerged his pay package nearly doubled to £2million last year.
The company faces a potential revolt at its AGM in Aberdeen as investors vote on the company’s remuneration policies.
But sources close to the firm said the First board was not facing a “Burberry”, after 52% of its shareholders of the luxury brand voted to reject a multimillion- pound pay package for new chief executive last week.
FirstGroup has defended the 94% rise in Mr O’Toole’s salary this year as it reflected the fact he took his bonus for the first time in three years and also received a one-off share payment that had been deferred for three years.
The company said it has also made progress in Mr O’Toole’s four year plan to improve the company’s bus and rail businesses in both the UK and US.
The new chairman, John McFarlane, has also made sweeping changes to the group’s board, including the replacement of the former head of its remuneration committee David Begg with Imelda Walsh at the end of last month.
Mr Gilbert, who is the chief executive of the FTSE-100 Aberdeen Asset Management, said:
“What happened was he [Mr O’Toole] waived his bonus last year which was why the increase.
“He’s a really good guy. I feel very sorry for him actually because he’s done a good job there,” he added.
Activist investor Sandell Asset Management, which owns just over 2% of First, recently claimed the company’s management team had been “rewarded for failure”. The Manhattan-based firm has also been demanding that the company sell off its US businesses, which it acquired in 2007 at the top of the market. The deals left the company massively in debt which forced it to raise £615million from investors last year.
But the “Sandell plan” was rejected by Mr McFarlane, who argued that it would be unwise to sell the company’s US-based yellow school bus business and its Greyhound bus service before the transformation plan was able to take full effect – adding that the activist investors should “settle down”.
Sandell said it would vote down FirstGroup’s remuneration report and called on other shareholders to do the same.