The board of Marks & Spencer took the unusual step of cutting Marc Bolland’s final bonus by a fifth, although the former chief executive still earned £17m over his six-year stint.
Vindi Banga, the chair of M&S’s remuneration committee, said after weighing up the retailer’s overall performance during the year, particularly in light of project delays, it had “determined that the bonus for the chief executive be subject to a discretionary downward adjustment of 20%”.
The cut meant the Dutchman collected a bonus payment of £622,000, equivalent to 64% of his annual salary rather than 80%, according to the M&S annual report.
Bolland still earned a total of £2m in his final year in charge, a period when underlying profits rose by just 3.5% to £684.1m. His successor, Steve Rowe, who took charge at the start of April, earned £1m and in his new role is entitled to a salary of £810,000 compared with Bolland’s £975,000.
M&S also revealed that Bolland earned £17.1m over his six years in charge. His period at the helm was characterised by investment with about £3bn ploughed into its creaking infrastructure, including new warehouses and website, rather than the profits recovery investors hoped for.
While M&S’s food halls prospered under the former Morrisons chief executive’s control, the company’s fashion and homeware business went backwards. Its clothing sales have grown in only one quarter over the past five years.
Unlike Bolland, who despite the declining sales picture continued to defend the company’s performance in clothing, Rowe was quick to brand the long-running slump as unsatisfactory.
Rowe, who has worked at M&S for 26 years, used his first annual results presentation last month to outline a strategy promising sharper clothing prices and a less slavish pursuit of catwalk trends. Rowe also vowed to put more effort into better serving its most loyal group of shoppers, dubbed “Mrs M&S”. These fiftysomething women had been neglected as it chased younger shoppers but Rowe promised to “cherish and listen to her”.
Rowe also revealed that M&S’s clothing had become too expensive compared with its competitors and was too reliant on running promotions to stimulate sales. Over a three-year period when the division haemorrhaged £200m of sales, the average clothing price rose 13%. At that time Rowe said his turnaround plans for the clothing arm would hit profits in the short term, an unexpected warning that sent M&S shares down 10%, its worst day on the stock market since 2009.
M&S remains the country’s biggest retailer of clothing and footwear by value but its annual report reveals that during the year the number of people buying its clothes dropped by 700,000 to 24.7 million. Rowe said in the report that while the company had encountered tough trading conditions in clothing, there had also been “failures in execution”. M&S has “a lot to do”, he added: “We have been giving customers too many reasons not to shop with us.”
The report also revealed that in line with his contract Bolland will continue to be paid his salary and other benefits until 7 Janaury 2017. Banga said the committee was now working on a new remuneration policy and would be consulting its major shareholders in the coming months.
