Remember when Mike Coupe sang ‘We’re in the Money’? Before the coronavirus turned our media into an endless cycle of doom, the sight of a singing Sainsbury’s CEO was big news. He had, of course, appeared on TV to talk about the proposed Asda merger – but Sainsbury’s was determined to dispel the link. It was “preposterous” to link the choice of song to the forecast £500m boost to Sainsbury’s profits, it said. Instead, the “innocent, personal moment” came from a musical he saw the year before.
Despite the obvious PR panic, it turned out to be a short-lived furore. Anger shortly gave way to an appreciation of the comedy value. Because prior to the Covid-19 era, being “in the money” was a far more acceptable state of affairs.
Today, of course, the climate has changed. Anyone making a profit at this time has to choose their words carefully. As staff are furloughed, redundancies loom and widespread administrations beckon, doing a roaring trade seems somewhat distasteful. Indeed, the supermarkets have had to carefully temper their healthy growth figures with an explanation of the extra costs they have incurred due to the coronavirus.
So it’s little surprise that executive pay has come under the spotlight more than ever this week. Tesco is facing a shareholder revolt after ceasing to take into account the performance of Ocado in its calculation of bonuses. Governance adviser Glass Lewis called on shareholders to vote against Tesco’s remuneration report, on the basis that it inflated executive bonuses and undermined “transparent, target-based pay”.
Morrisons is similarly coming under fire over the fortunes of its executive board. Again, shareholders are set to revolt – this time, on the point of pensions. Morrisons is proposing a 24% pension contribution rate for CEO David Potts and COO Trevor Strain, going against recommendations that suggest contributions should be aligned with the 5% received by the rest of the workforce.
Finally, Sainsbury’s has attracted criticism for handing almost £2m in bonus shares to its senior executive team less than a fortnight after deferring its final dividend.
One thing is clear: it is very difficult to justify bumper pay packages at this time. Although these packages apply to the year before Covid-19 hit – when there were plenty of examples of strong leadership – the mood has changed. Any inflation in pay will come under a high level of scrutiny, especially if it means that shareholders are losing out to give higher rewards to the directors.
The unrest over board-level pay also reflects the current feeling towards key workers. Supermarket staff have earned huge amounts of praise for keeping stores going during the challenges of the Covid-19 crisis. Many of the mults have recognised that with extra pay for those at store level, but that will ring hollow if the board members are still enjoying far more seismic gains and better terms and conditions. At a time when the Co-op’s Steve Murrells has taken a 20% pay cut to go towards its Members’ Coronavirus Fund, large rises in executive pay aren’t a good look.
Indeed, the PR effort will need to be truly monumental to get shareholders and the public on board. Suddenly singing a show tune on national TV doesn’t seem so bad, does it?
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