It’s the sight no chief executive wants to see when they step down – a rise in the share price.
Such was the fate of Rico Back, who is stepping down with immediate effect after just 23 months at the helm of Royal Mail, whose shares promptly rose by more than 8% at one point on Friday.
Cushioning the blow for him will be a £480,000 pay-off, in lieu of his notice period, to be doled out in equal monthly payments over the next nine months.
Along with other share awards and benefits, his total farewell package is likely to come to about £1m.
The pay-off is in keeping with the emoluments that made Mr Back such a controversial appointment in the first place.
Royal Mail shareholders and trades unions alike were outraged when, in May 2018, the company confirmed a Sky News report that he would be receiving a £6m “golden hello” on becoming chief executive.
That payment sparked a massive shareholder revolt and earned Orna Ni-Chionna, the then head of Royal Mail’s remuneration committee, a duffing-up at the hands of the cross-party Business, Energy and Industrial Strategy Select Committee five months later.
She stepped down from the board the following year.
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By then, it had also emerged that Mr Back, a German national, was spending some of the working week at his home in Switzerland, the commute from which earned him the nickname “The Flying Postman”.
Mr Back’s location became an issue again more recently when the Daily Mail revealed that both he and Achim Dunnwald, Royal Mail’s chief strategy and transformation officer, had been doing their jobs from outside the UK during the COVID-19 lockdown period.
It was a bad look for the company at a time when Britain’s postmen and women were putting their lives on the line every day by continuing to deliver letters and parcels to households.
Postal workers complained the protective equipment with which they were being issued was inadequate.
At least three have died from coronavirus and, during the crisis, there have been a number of walkouts at sorting offices in protest at a lack of hand sanitiser and a failure to implement social-distancing rules.
The Communication Workers Union, never a fan of Mr Back and whose members voted for strike action in March, demanded his resignation.
It was backed by MPs from across the political divide.
Robert Halfon, the Conservative MP for Harlow, said: “At a time when thousands of postal workers are heroically risking their own health and the health of their families to serve their communities, it seems astonishing that the head of Royal Mail is hiding away in a Swiss penthouse.
“This is truly a case of lions being led by a donkey.”
Making matters worse was the fact that, unlike many other companies forced to cut or cancel their dividends in response to the crisis, Royal Mail’s executives appeared not to be sharing the pain with shareholders.
Unlike other household names, such as WHSmith, ITV, BT Group and Sainsbury’s, all of which cut executive pay and bonuses after taking the axe to their dividend, there were no pay cuts announced for Royal Mail executives.
The company belatedly announced on Friday that it was shelving bonuses for executives during the current financial year.
With the flak coming from all directions, then, it was not a surprise to see Mr Back fall on his sword.
The company will now be run by Keith Williams, former chief executive of British Airways, who moves from non-executive chairman to executive chairman during the search for Mr Back’s successor.
Royal Mail’s stock exchange announcement pointedly noted that Mr Williams “is experienced in business transformation and industrial relations”.
That is just as well, for this appears to be an unmanageable business, blighted by industrial relations akin to the chaos that engulfed British industry in the 1970s.
Mr Back’s defenders argue he was given a hospital pass by Moya Greene, his predecessor, who reached a deal with the union on pay, pensions and working hours in return for it signing up to efficiency targets.
Entrusted with delivering those improvements and with keeping the union onside was Sue Whalley, the former chief executive of Post and Parcels UK, touted to the union by the outgoing Ms Greene as a manager they could trust.
Unfortunately, within months of Mr Back taking the job, Ms Whalley – who had been a contender for the top job herself – was shown the door.
Yet Mr Back’s departure has not removed the need for modernisation.
His vision was for Royal Mail to become a “parcels-led, international delivery company” capable of competing with businesses like FedEx, TNT and DHL, the latter of which is owned by Deutsche Post, the German equivalent of Royal Mail.
That vision entailed the introduction of automated parcel sorting, opposed by the CWU, with the upshot that, before COVID-19 struck, Royal Mail was facing its first national strike in a decade.
The latest trading update highlighted that need for reform.
The deterioration in letter volumes has accelerated and, while parcel volumes were up, it could only partly offset the lost revenues from letters.
Mr Williams got off to a good start by announcing £25m worth of cash bonuses to frontline postal staff in recognition of their recent efforts.
But getting the union to sign up to the kind of modernisation essential to Royal Mail’s future is a big ask.
The share price reaction suggests some investors think Mr Williams can do it.
Past experience, though, suggests they are being overly optimistic.
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