Marks & Spencer will not pay its directors’ bonuses this year, the retailer announced on Thursday, weeks after revealing plans to shut 100 stores.
The company said in its annual report that the decision to cut bonuses for the 2017/18 period was “not taken lightly and was the result of careful consideration of a number of factors”.
In particular, the firm highlighted that the profit before tax of £580.9m reported last year was below the threshold required to pay bonuses to the wider staff, so the remuneration decided “in the interests of fairness, it would not be appropriate to pay a bonus to directors, irrespective of any achievement against each director’s individual objectives”.
Removing the bonus meant chief executive Steve Rowe took home more than £500,000 less than he did the year before, but he still pocketed £1.12m. The remuneration committee said Mr Rowe had agreed that “ that it would not be appropriate to award any salary increase to the CEO for July 2018, despite no increase in Steve Rowe's salary since his appointment to CEO in 2016”.
Meanwhile, the group’s outgoing marketing boss Patrick Bousquet-Chevanne took home £777,000, compared with £1.16m in 2016/17.
Mr Rowe said the company, which has been beset by declining profits and falling sales in its clothing department over recent years, “needs to change and change fast”, but added: “Change comes with short term pain.”
He noted that profits were impacted by the cost of making some of those changes, including a £321m charge linked to store closures that took place over the last year.
“We have worked hard to put out the fires in our business over the past couple of years and are now in the first phase of our transformation plan, restoring the basics so that we can deliver sustainable, profitable growth to investors, colleagues and the communities in which we operate,” said Mr Rowe.
M&S narrowly avoided being relegated from the FTSE 100 for the first time ever in the most recent reshuffle.
However, Laith Khalaf at Hargreaves Lansdown warned that “this is a stay of execution rather than a full pardon”, given reshuffles happen every three months.
“M&S boss Steve Rowe is promising transformation, and has been candid in admitting it’s a lengthy road ahead,” said Mr Khalaf.
“However, the pace of disruptive technological change means making M&S special again is a moving target, and management are taking aim from a long way out.”
M&S announced its bonus plans on a day full of retail news, with House of Fraser confirming it is likely to close 31 stores in the UK, while Poundworld hovers on the brink of administration.
