Marks & Spencer’s former boss more than doubled his pay to £2.63m last year after getting his first bonus since 2017 as the cost of living crisis intensifies for customers.
Steve Rowe, who stepped down as chief executive last month, will not receive a payoff but will continue to be employed as a consultant paid up to £843,000. This can be for up to a year after ceasing full-time employment for M&S – after the group’s annual shareholder meeting on 5 July.
He will also be able to cash in 2.85m of M&S bonus shares currently worth about £4.1m over the next few years, if performance criteria are met.
The pay rewards emerged as the M&S chairman, Archie Norman, warned: “In the next eight months we expect the strongest reduction in consumer real income for decades.”
He said that the expected reduction in customers’ real income would impact profits but said “the test of the quality of a business is not whether it encounters storms, but how resilient it is to ride them out.”
Norman added: “With the changes we have made, M&S is in much stronger shape and we start from a rising trend in sales.”
M&S’s remuneration committee said it had decided it was appropriate to hand Rowe a £1.6m annual bonus on top of his £1m in fixed pay and benefits despite the fact that he will be working his notice period when it is awarded. He will receive half his bonus payment in July and half will be held as M&S shares for three years.
“[Rowe] has worked tirelessly and determinedly to deliver on the transformation promise, as demonstrated in our strong 2021-22 business performance,” Andrew Fisher, head of M&S’ remuneration committee said in the annual report.
The retailer pocketed about £62m in government business rates relief during the year.
The group said 4,500 store management and head office staff would also get a bonus for the first time since 2017, the end of Rowe’s first year in the job.
From April M&S also increased minimum pay for its shop workers by more than 5% to £10 an hour and offered free health checks as it battles to secure staff in a tight jobs market.
Rowe’s replacement Stuart Machin will receive a salary of £800,000 while co-chief executive Katie Bickerstaffe will receive £750,000. Machin could receive almost £5.5m in total pay if he hits performance targets, while Bickerstaffe could earn up to £5.1m.
Norman wrote in the retailer’s annual report that Rowe was leaving just as M&S faced an “inflection point in its history”.
Last month, M&S revealed pretax profits of £391.7m in the year to 2 April compared with a loss of £209m a year before, as sales rose 18.6% to £10.9bn.
“Not only have we emerged from the pandemic a stronger business, but we are also at the end of the ‘fixing the basics’ phase of our transformation. And we have a very dynamic new leadership team taking over from Steve Rowe, our longstanding chief executive,” Norman said.