© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
June 7, 2012 10:29 pm
The chief executives of Marks and Spencer and J Sainsbury will both receive reduced annual cash bonuses as they failed to meet performance targets.
Marc Bolland of Marks and Spencer will receive an annual bonus worth £663,000 following a fall in profits at the retail group. He will receive a cash bonus of £332,000, a 19 per cent decline, with the remaining amount in shares to vest in June 2015, according to the retailer’s annual report.
Mr Bolland had not been expected to be awarded a maximum bonus payment as some 60 per cent of the award is based on pre-tax profit growth. Last month the high street bellwether reported its first year-on-year fall in underlying pre-tax profits in three years, which dipped 1 per cent to £706m for the year to March 31.
The rest of Mr Bolland’s award is based on personal objectives, such as expanding the group internationally. Last year he received a bonus of £1.023m, including £409,000 in cash. His basic salary of £975,000 for the financial year was unchanged.
Mr Bolland will also receive just under £1.28m of shares this month under a plan based on the growth of earnings per share above the rate of inflation over the past three years. This also falls short of the possible £3.9m maximum, with the retailer saying that earnings were beyond a “threshold target” but “below maximum performance.”
A deal to compensate Mr Bolland for shares he would have received at his previous employer, Wm Morrison, also meant he is became entitled to £1m of shares split in two equal tranches, the first of which vested last December with the second available this month.
Justin King, the chief executive of J Sainsbury, also took home a reduced bonus for the year to March, according to the supermarket chain’s annual report. Britain’s third-biggest supermarket chain by market share said that Mr King’s bonus for the year to March 2012 was £514,000, down from £520,000 for the same period the year before.
The company said annual sales had grown but still fell below what it deemed the “threshold level,” which curtailed the bonus award. Mr King’s basic salary rose from £900,000 to £920,000.
“I think ‘fair enough’ probably comes into the vocabulary,” said Clive Black, an analyst at Shore Capital. “Both companies have toughed it out reasonably well.” He added that the reduced bonus awards and decision by Philip Clarke, chief executive of Tesco, to forego his annual bonus following the retailer’s first profit warning in 20 years showed that some of the biggest UK retailers appeared to be paying more attention to public scrutiny of pay.
Marks and Spencer revamped its executive pay structure last year, capping the potential bonus for senior executives at 200 per cent of annual salary, down from 250 per cent.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in