The struggling photographic equipment retailer Jessops has paid its executive chairman, David Adams, a cash bonus of £500,000 for securing new banking facilities for the company and saving it from collapse.
The one-off payment to Mr Adams, reported in the annual report, is worth about 7 per cent of the entire company.
Mr Adams, a former finance director of the department store chain House of Fraser, was parachuted into Jessops to revive the ailing business.
As part of a restructuring of the company last year, Jessops cut 550 jobs and closed 81 stores – a quarter of its sites. This followed a series of profits warnings from the chain. Jessops has been under pressure from low-cost internet-based retailers.
In February, the company said it was renegotiating its banking facilities due to falling margins and tougher conditions. Four months later, it announced it had agreed a new facility of £66.5m with HSBC. Mr Adams has received his bonus in cash but, under the terms of the agreement, he will have to re-invest half of it in company shares. The annual report said the bonus was originally structured to be 70 per cent in shares and the rest in cash, but had later been "restructured" to be 50 per cent in each.
The original terms would have allowed Mr Adams to cash in the stock after a year, while the revised deal will require that the shares be held for a minimum of three years, a spokesman said.
Shares in Jessops, which have plummeted by 95 per cent since the start of May, closed at 7.68p yesterday, less than half the closing price of 18.25p when Mr Adams was appointed on 3 May.
Nick Bubb, a retail analyst at Pali International, said the payment was fair as the new facilities prevented the certain collapse of the group.
"It came at the cost of a punitive interest rate [5.25 per cent], but without it the company would have gone bust," he said. However, he added that it was lucky the move was before the credit crisis kicked in during the autumn. "Even some sort of superhuman would not have been able to do it three months later," he said.
Earlier this month, Jessops revealed that it had managed to stem the sales decline over the Christmas period with better stock control and strong sales of digital single lens reflexive cameras (DSLR). The chain reported a 0.3 per cent rise in like-for-like sales over the seven weeks to 6 January, compared with a fall of 7 per cent the previous year.Reuse content