CEO of Britain's Co-Op takes 60 pct pay cut as recovery reduces workload

(Adds CEO, chairman comments)

By Paul Sandle

LONDON, April 7 (Reuters) - The chief executive of Britain's Co-Operative Group will take a 60 percent pay cut as his workload has eased since the supermarkets-to-funerals group overcame a financial crisis two years ago, the mutual said on Thursday.

In a statement, it said CEO Richard Pennycook had requested the pay cut, which will see his basic pay drop to 750,000 pounds for the year starting on July 1, from 1.25 million pounds for the previous 12 months.

Additional reductions to his pension and bonus will cut his total package by nearly 60 percent, it said.

Chairman Allan Leighton said Pennycook believed his job had changed from a rescue operation to rebuilding, and his pay should reflect the values of the mutually owned group.

However, he said Pennycook had earned every penny of his former salary.

"(The Co-Op) was long gone and dead not such a long time ago, and the fact we can sit here today saying all facets of our organization are growing and we feel very confident about the future is a reflection on the work that has taken place," Leighton told reporters.

Pennycook joined Britain's biggest mutual in 2014 when its future was in doubt after a 1.5 billion pound funding "hole" was found at its banking operation a year earlier. It (Other OTC: ITGL - news) returned to the black last year.

The group's recovery has been aided by a shift in Britons' habits towards smaller, more frequent shopping in convenience stores rather than weekly visits to superstores owned by Tesco , Sainsbury (Amsterdam: SJ6.AS - news) 's, Asda and Morrisons.

Like-for-like sales in the Co-Op's food business grew by 1.6 percent in the year to Jan. 2, the company said, helped by lower prices for fruit and vegetables and an improvement in own-brand products.

Data published by Kantar Worldpanel on Tuesday showed Co-op increased food sales in its more than 2,800 stores by 3.9 percent in the 12 weeks to March 27, far outstripping its bigger rivals.

The group, which also has insurance and funeral operations, reported broadly stable group revenue of 9.3 billion pounds for 2015 on Thursday, while pretax profit fell to 23 million pounds from 124 million pounds, reflecting major investment and a 121 million pounds boost in 2014 from disposals.

It said investment in the business would continue in 2016, but it did not expect to pay a dividend to its 8 million members until its turnaround programme finishes at the end of 2017. ($1 = 0.7102 pounds) (Editing by Sarah Young and Susan Fenton)