Mothercare's chief executive, Simon Calver, is bracing himself for a backlash over his highly incentivised pay package, which could see him pocket £6.7m, including £4.8m in shares.
The former LoveFilm boss faces shareholders at a general meeting next week who have been advised by the activist investor group Pirc to vote down his remuneration deal, in echoes of the "shareholder spring" from earlier this year. His deal includes a maximum payout of three times his salary if strict profit and share price targets are met by 2015.
Under the long-term incentive plan (LTIP), half of this payout will be deferred until 2016. Ahead of Thursday's meeting, Pirc's guidance to investors said: "The potential long-term remuneration is considered excessive and golden hellos are not considered in line with best practice."
Mothercare must deliver group pre-tax profit of £70m for the year to March 2015 and a share price of £7 for Mr Calver to receive the LTIP's maximum payout. When he joined Mothercare at the end of April its share price was 167p and it had just posted a painful annual loss of £102.9m.
Mr Calver, who has a salary of £500,000, could also net a bonus equal to 125 per cent of his wages over three years, worth a maximum of £1.88m, should Mothercare hit undisclosed profit targets and customer feedback scores.
The group, which has 280 UK stores and more than 1,000 overseas, narrowed its losses significantly to just £600,000 over the half-year to 13 October, following improved domestic trading and the shedding of unprofitable shops.Reuse content