The top three executives at Marks and Spencer could earn more than £15mn between them for the current financial year if they hit targets and the retailer’s share price recovers by 50 per cent.
Following the retirement of current chief executive Steve Rowe, the top job will be split between Stuart Machin and Katie Bickerstaffe, while chief financial officer Eoin Tonge is also taking on enhanced responsibilities.
According to M&S’s remuneration report, Machin could earn £5.49mn with Bickerstaffe — who is to work a four-day week — just behind at £5.10mn. Tonge’s maximum earnings potential is £4.54mn.
For these amounts to be paid the trio would have to hit a variety of personal and corporate performance targets, resulting in full payouts from both the annual bonus plan and a long-term incentive scheme. In addition, the retailer’s share price would have to rise by 50 per cent over the three-year term of the incentive scheme.
Awards under that plan, which would account for more than half the theoretical maximum payout, will not be known until mid-2025 and will be made in the form of M&S shares that must be held for a further two years.
M&S has not been known for boardroom excess in recent years, largely because its financial performance has been weak during a protracted period of restructuring.
However, last year brought evidence of recovery; the company upgraded its profit forecast twice and eventually reported adjusted pre-tax profit of £522mn, up sharply from the pandemic-hit levels of the previous year.
That meant M&S paid out bonuses to senior staff for the first time in five years. Rowe is to receive an annual bonus of £1.6mn, taking his total pay to £2.63mn, from £1.07mn last year. It is only the second time he has received a bonus in six years as chief executive.
Rowe’s share-based incentive plan did not pay out at all because earnings per share in the year to March fell short of the required threshold and M&S’s shares performed below the median achieved by a peer group of retailers.
That left his overall pay well short of some peers. On Monday, supermarket J Sainsbury disclosed that chief executive Simon Roberts received a total of £3.8mn in respect of the financial year just ended while Tesco boss Ken Murphy earned £4.7mn — more than 200 times the pay of the average Tesco worker.
Many retail chief executives waived pay rises and bonus payments during the pandemic, conscious of the contrast between their remuneration levels and those of shop floor staff who continued working throughout lockdowns. But that restraint has now been largely abandoned.
John Lewis Partnership is an outlier in that it has capped executive pay at no more than 75 times the annual salary of a shop-floor worker. Its chair, Dame Sharon White, received £1.15mn in respect of the year to January and has turned down an increase in basic pay for the second year running.
At Next, Lord Simon Wolfson was paid £4.4mn, the highest since 2015, while Kingfisher’s chief executive Thierry Garnier received £2.16mn.