Where Tesco leads, others follow.
Marks & Spencer might be a very different business but the high street giant has followed Tesco’s example with a shake-up of the pay for its top bosses. That’s just a week after Tesco overhauled the remuneration for its executives.
While “collegiate” was the watchword for Tesco, observers say M&S was looking for modernity. Broader criteria have been introduced for determining performance, with 60% based on underlying profit and the remainder judged against certain strategic benchmarks that match Marc Bolland’s November masterplan.
“The committee believes we have developed an incentive structure that will clearly support and motivate the team in a way that is aligned with the business strategy to deliver quality long-term growth for the business,” said Steven Halliday, who chairs the remuneration committee.
“We will be seeking shareholder approval for these amendments to the long-term incentive plan at the 2011 AGM.”
Like Tesco, M&S has scented mutiny in the air at recent shareholder gatherings. Sir Stuart Rose rode out a rebellion at the 2009 AGM, while there was unrest last year over the size of Bolland’s golden hello.
Still, you can hardly blame Bolland for wanting the best deal he could get. The M&S chief executive pocketed cash and shares worth £4.4m in the year to March, including compensation for shares he gave up by walking away from Morrisons. That could rise to £13.8m if performance targets are hit, just below the £15m figure that grabbed the headlines when he joined.
As today’s Evening Standard notes, news of the pay comes just days after Rose offered his thoughts on the yawning gap between worker bees’ earnings and those of the retail kingpins.
“We have to accept that over the last year or three the division between the lowest paid and the highest paid has got wider, so that does need looking at,” said the man who earned £2.77m in his final year at the business.
He added: “The biggest rule people should set is no pay for failure. That’s what people really, really hate.