Royal Mail boss Rico Back will pocket up to £1 million as he steps down with immediate effect after spending less than two years at the helm of the postal giant.
The board said it had agreed with Mr Back that he should vacate his post and go on gardening leave until the middle of August.
It comes as it said revenue had fallen by £22 million in April, as Britons sent 33% fewer letters.
Mr Back was already facing criticism from both unions and shareholders.
Schroders, which holds around 15% of Royal Mail’s shares, was expected to raise the issue with bosses at the company, the Daily Mail reported last month.
On Friday, Royal Mail finally relented, saying it will not pay any bonuses to executive directors for the 2020 financial year.
It has also set aside around £25 million to hand a £200 bonus to each frontline staff member in June.
Unions had criticised Mr Back for sitting out the pandemic in his family home by Lake Zurich while frontline postal workers continued to deliver mail across the UK.
“The UK is gripped by the coronavirus crisis. Postal workers are keeping our communities connected,” Dave Ward, the general secretary of the Communication Workers Union (CWU), said last month.
“By any measure it is not acceptable for the CEO of the UK postal service to live and work abroad – at this, or frankly any other time.”
“Postal workers have been outstanding during this pandemic and are ready to embrace innovation, new products and building on their role in every community in the UK. It is absolutely critical that the new CEO wants to work with the CWU to overcome the challenges we all face and deliver the postal service the public and our members deserve.”
Mr Back will be paid three months’ salary while he is on gardening leave, and will pick up an extra nine months’ pay after that.
Based on Thursday’s share closing price, Mr Back will be handed up to around £1 million in shares, benefits and salary over the coming years.
However, some of this is based on performance reviews that have yet to take place.
Mr Back’s time in charge of Royal Mail started with a row over his pay package, after it was revealed he had been given a nearly £6 million golden hello.
Luke Hildyard, executive director of the High Pay Centre, told the PA news agency: “Paying millions in joining and severance payments to someone who lasted less than two years in the job is completely farcical and a huge embarrassment to the Royal Mail board of directors.
“It would be a better idea to pay executives as the fallible individuals that they actually are and concentrate on building a committed, motivated workforce and workplace culture, with a much fairer balance between the pay of those at the top and everybody else.”
Royal Mail said that its frontline workers carried 36 million more parcels, but 308 million fewer letters in April. Costs rose by £40 million in the UK parcels, international and letters part of the business, due to overtime and agency costs.
Mr Back will be replaced by a duo of former British Airways boss Keith Williams, who becomes interim executive chairman, and Stuart Simpson, who will be the chief executive until a permanent replacement can be found.
Mr Williams said: “Rico Back has made a significant contribution to the evolution of our business over his 20 years with us, particularly in building our international parcels business and developing our group strategy, which recognised the urgent need for change to create a sustainable business for the future.
“On behalf of the board, I would like to extend my thanks to Rico and wish him well in the future.”
Mr Back said: “It has been a privilege to lead a company that is so much a part of UK life at this crucial time in its history. I am proud of what I, together with our dedicated and loyal team, helped to build in Royal Mail and GLS.
“I look forward to seeing Royal Mail transform into a parcels-led, international delivery company, that continues to touch the lives of millions across the world.”