The executive chairman of Marks & Spencer, Sir Stuart Rose, enjoyed a 28 per cent jump in his remuneration last year, despite the high street bellwether suffering a 40 per cent slump in pre-tax profits.
While Sir Stuart did not receive a bonus for the second year running, he still pocketed a package of £1.77m in 2008/09, compared with £1.38m the year before, according to its annual report that landed yesterday.
He received a salary and fees of £1.13m, a cash allowance of £302,000 and benefits of £45,000, but the spike was driven by a cash payout of £288,000 for dividend equivalent payments on his shares, which vested in July 2008 under the M&S Performance Share Plan.
The rise in Sir Stuart's pay is likely to spark anger among some shareholders at its annual meeting next month, particularly given the profits slump and M&S's decision last month to slash its dividend by a third to 15p a share from the current 22.5p a share. His salary increased from £1.07m to £1.38m in 2008/09, but this was the result of a pay rise in January 2008 before the start of its last financial year.
He also received 473,868 free shares – awarded to him in July 2005 but which vested in March 2008 – under a long-term incentive scheme, after M&S hit performance targets over the three years. Under a current incentive scheme, the M&S chairman has been given 1.18 million shares, which will vest in 2011 and could give him a potential bonus of four times his salary if the retailer hits all its maximum performance targets. But an M&S spokeswoman said these were "very stretching targets".
At the AGM next month, M&S's army of private shareholders are also likely to raise the hotly debated topic of finding a chief executive to succeed Sir Stuart. M&S said last month that Carl Leaver, its head of international, was leaving, which left Ian Dyson, the group finance and operations director, the internal front runner, said observers.
Mr Dyson saw his pay leap by 45 per cent to £1.09m in 2008/09, after he took home a basic salary of £675,00, a £186,000 cash allowance, £5,000 of benefits and £143,000 of dividend equivalents. Kate Bostock, the executive director of clothing and home, received total pay of £892,000. In the report, Sir David Michels, the deputy chairman of M&S, said: "If internal succession is appropriate, we would expect to announce the appointment of a new chief executive during 2010. Stuart would then stay on for a suitable period to affect a smooth transition before we identify an independent chairman and revert to recommended best practice." Sir Stuart will leave by 31 July 2011.
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