WH Smith boss Kate Swann in line for £4m bonus payment
Friday 15 October 2010
Kate Swann, the chief executive of WH Smith, who is credited with turning around the once struggling retailer, is set to take home a £4m bonus this year after hitting a number of performance targets.
The award comes as the 218-year old group said it would beat analysts' full-year expectations with pre-tax profits of £89m. Smith's also announced that it would lift its full-year dividend by 18 per cent.
Ms Swann's bumper pay award is a reward for a wholesale turnaround of the company, which was a high street laggard when she took over in 2003. The bonus, under a long-term incentive plan, comes four years after Ms Swann was paid £3m for hitting earlier performance targets.
Key to her success has been to scale back dramatically WH Smith's entertainment offering, eschewing DVDs and video games in favour of newspapers, magazines and books. And although yesterday's preliminary results showed that overall sales were down over the last 12 months, the company reported an increase in the gross margin.
Ms Swann declared herself pleased with the performance of the company's two main divisions, its high street shops and its travel business, which serves railway stations and airports. She added that although next week's austerity measures, to be detailed by the Chancellor on Wednesday, were a concern, "relative to other retailers our average transaction value is pretty low at around £5, so we are less affected during a downturn or tougher economic times".
Ms Swann's strategy of ditching WH Smith's entertainment business can be lauded when considering the fate of Woolworths and Zavvi, which both disappeared from the high street during the height of the financial crisis, but she admits that the company is still to finalise its strategy for dealing with the growing market for ebooks. None the less, WH Smith has launched an ebook app for Apple's iPad and has penned a deal with Dixons to be the default online seller of ebooks where possible on products it sells. It has also teamed up with Samsung to promote its Slide e-reader.
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