WH Smith (SMWH) has handed CEO Stephen Clarke a bumper pay rise of more than 12% to take his salary to £550,000 as a reward for the retailer’s strong performance in recent years.
The FTSE 250 group said in its 2015 annual report, published today, that Clarke’s current package had fallen to an “uncompetitive” level.
The one-off 12.3% increase, which took effect from 1 September, follows a comprehensive review of pay structures at the company by the remuneration committee. The changes, which also included consolidating the long-term incentive plan (LTIP) and the co-investment plan (CIP) into one plan, received “strong” support from the retailer’s largest shareholders, committee chairman Drummond Hall said.
“The committee also concluded that given the strong performance of the company since Stephen Clarke was appointed as CEO in July 2013, his current package had fallen to an uncompetitive level, both relative to suitable external benchmarks and to the size of the role,” he added.
Clarke will be eligible for future salary rises but he has pre-agreed with the committee to forego any annual increase in March 2016 when group wages are reviewed. Even with the increase, his salary is still 20% below comparable mid-market peers, Drummond said.
Shares at Smith have jumped by 146% from 718p to 1,762p since Clarke took charge of the stationery and books retailer as it turned its focus from the high street to travel stores in airports and railway stations and from sales to profits.
In the year ended 31 August, group pre-tax profits jumped 8% to £123m as sales from the travel division increased 9% and overall like-for-like revenues came in flat after spending more than a decade in decline.
As a result of the performance, Clarke and CFO Robert Moorhead were awarded bonuses worth 160% and 130% of their respective base salaries of £485,000 and £364,000, which rose 2% for the year in line with general annual hike for all head office staff. The pair’s bonuses – the maximum amounts available – totalled £783,000 for Clarke and £477,000 for Moorhead, up from £720,000 and £468,000 in the previous year.
The executives also received a hefty award from the long-term share scheme, worth almost £2.6m each, after the 2012 LTIP vested in full thanks to earnings per share rising 41% over three years. Along with pension contributions of £121,000 and £89,000, Clarke and Moorhead’s total remuneration package for the year were £4m and £3.5m respectively – up 56% and 50% on 2014.
Former CEO Kate Swann, who resigned as a director in 2013, received £1.5m in the year after exercising her 2011 LTIP in November 2014.
WH Smith has faced criticism this year after Clarke said the business would not be following the lead of other retailers and extending the new national living wage to under-25s. The group is also waiting until April, when the living wage is enforced, to roll out the increase, in contrast to a number of industry rivals which are already paying the new minimum rate.
WH Smith expects to spend up to another £3m a year funding the increase in the minimum wage for over-25s next year.
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