Investors in education group Pearson have delivered a rebuke to Chief Executive John Fallon hours after he set out a new cost-cutting plan to try to revive a business hit by the rapid move to digital learning.

Plans to cut costs by£ 300 million annually by 2020 helped to send Pearson shares up as much as 15 percent but Fallon warned of a long road ahead.

Investor anger was evident at the company’s annual meeting where nearly 70 percent of shareholders voted against its remuneration report in a symbolic protest over the company’s performance under Fallon.

The 173-year-old British company has been hit by a sharp downturn in its biggest markets, issuing five profit warnings in four years, as students ditch more expensive text books for second-hand copies and digital services.

“For the next year or two we think the negatives will continue to outweigh the positives so we are running the business on the basis that things will not get better any time soon,” Fallon told reporters.

“But they will get better, there is a point in two or three years time when that pendulum shifts.”

Employing 35,000 people, the British group provides everything from textbooks to school testing, college courses and online degrees around the world.

Having grown rapidly since 2008, it started to lose its way in 2015 when the U.S. economy recovered, encouraging more people to take jobs rather than go into higher education.

In 2016 the shift to digital services in the U.S. stepped up a gear, leading to an “unexpected and unprecedented” 14 percent drop in the U.S. higher education teaching materials market.

UNCERTAIN FUTURE

Investors are divided between those who think governments will always need to invest in digital learning services, and those who think the industry is facing the same disruption as that already endured by the newspaper and music industries.

Fallon, who is under fire for his handling of the downturn, said the company’s move to digital products was helping the company to become more efficient. He has taken out more than 650 million pounds of costs in the last four years.

Pearson will review its U.S. school courseware publishing business, which it said had been slow to switch to digital. It said the division required high levels of investment and was facing a challenging market environment.

Pearson, which had lost a quarter of its market value in the nine months before Friday’s update, said first-quarter trading had been in line with guidance and stuck to full-year targets.

Analysts said the new plan should boost earnings. “Each 100 million pounds of savings assumed in 2018 would add around 20 percent to consensus earnings per share,” analysts at Citi said.

However not everyone was convinced.

“Past evidence suggests that extra cost savings at Pearson do not lead to more profits, it just offsets revenue declines,” said Ian Whittaker, an analyst at Liberum who has a key “Sell” rating on the stock.

The strong share bounce failed to soften the blow when Fallon appeared at the company’s annual meeting on Friday, with 66 percent of investors rejecting the non-binding remuneration report, which assigned Fallon a 20 percent pay rise in 2016.

Private investors asked the board whether they were “asleep on the job” and “paying for failure”. Chairman Sidney Taurel said Fallon had inherited a very complex business when he took over in 2013 and noted he had spent his bonus on new shares.

Education publisher Pearson face real test of John Fallon’s homework