More than six out of 10 Pearson shareholders have voted against the £1.5m pay package awarded to the embattled chief executive, John Fallon, after the educational publisher reported the largest annual loss in its history.

Fallon received a 20% pay rise last year, including a bonus of £343,000, despite the company recording a record loss of £2.6bn.

Disgruntled investors expressed their anger at the company’s annual general meeting in London on Friday, with 61% voting to reject the remuneration report and nearly 7% abstaining in the non-binding vote.

According to corporate governance group Manifest, the protest was the largest shareholder rebellion at a FTSE100 company since 90% voted against Sir Fred Goodwin’s pension arrangements at Royal Bank of Scotland in 2009.

In 2012, Sir Martin Sorrell, the chief executive of WPP, suffered a humiliating defeat when nearly 60% of investors rejected his pay packet at the company’s annual general meeting.

In a bid to placate investors, Fallon, who has faced calls to step down, has invested his bonus in Pearson shares as a show of confidence.

“I am the son of a teacher; several members of my extended family are teachers. I understand how privileged and lucky I am to have the level of remuneration that I have,” Fallon said. “I understand what chief executives are paid. I decided that the right thing to do was buy shares in Pearson.”

On Friday, the Pearson chairman, Sidney Taurel, said that he and Coram Williams, the finance chief, would increase their shareholdings in the company.

There was a significant protest against the company remuneration policy, which was up for a binding vote this year, with 36% either rejecting it or abstaining.



One investor at Pearson’s annual meeting accused the board of being “asleep on the job” and said the remuneration strategy had “manifestly failed and has been paying for failure”. “We do not need millions of pounds paid for shoddy performance such as we have seen at this company,” he said.

The investor revolt follows Pearson reporting a record pre-tax loss last year, after a slump in its US education business. Despite the poor performance of the company, staff still shared £55m in bonus and incentive payments as Pearson reached some goals including profit targets.

Taurel defended the payouts to Pearson’s top brass, saying operating profits had come within guidance despite a difficult 2016 for the business overall.

Fallon, who slashed 4,000 jobs last year, 10% of Pearson’s global workforce, said the company intended to make more job cuts as part of a new £300m cost-cutting programme by 2019. He would not be drawn on numbers.

In January, the company slashed its profit forecast for this year by £180m and scrapped its target of £800m next year.

However, Pearson’s share price shot up more than 12% on Friday after the company pleased investors with its trading update for the first quarter of 2017.

In a rare bit of good news, the company said revenues had surged 6% compared with a fall of 4% in the same quarter last year and it planned to sell the K12 courseware publishing business in the US.

The company is currently in the process of selling its stake in Penguin Random House, which sells titles ranging from Fifty Shades of Grey and The Girl on the Train to Nigella Lawson and Jamie Oliver’s recipe books, for more than £1.2bn.

An investor criticised the move as “selling the family silverware” to prop up the rest of Pearson’s business.

Taurel said the sell-off of Pearson’s consumer publishing assets – including the Financial Times and its stake in the Economist – was a “strategic decision and not taken lightly”.