Quality | 2010.02.02
£15m golden hello for new M&S boss
Critics says deal flies in face of political demands for restraint in boardroom amid furore over bankers\' bonuses
Marks & Spencer has struck a £15m deal with its new boss, Marc Bolland, that is thought to be one of the biggest golden hellos in corporate history.
The company was forced to get out its chequebook to lure Bolland away from Morrisons, which under his leadership has become the fastest-growing supermarket in the UK.
M&S, once seen as byword for quality on the high street, desperately needs the Dutchman to resurrect its flagging food business which is losing customers to rival chains such as Waitrose and Sainsbury\'s.
Bolland will earn at least £8.5m in the first year, a sum that includes £7.5m compensation for lost bonuses and shares that he would have received in his old job.
Critics say the aggressive deal flies in the face of political demands for restraint in the boardroom amid the furore over bankers\' bonuses and renewed concerns in the City about the company\'s regard for good boardroom practice.
Bolland\'s annual salary of £975,000 will be 77 times the retailer\'s average pay level. On top of his basic salary, he could earn a bonus worth up to £2.5m. The package also includes an "exceptional" award of shares worth nearly £4m.
According to its most recent annual report, M&S\'s 77,800 employees earn an average of £12,500.
Bolland, a sharp-suited former marketing executive at the brewer Heineken, has already earned the nickname the $1bn man owing to the stock market reaction on the day his appointment was announced: M&S\'s shares rose 6%, while Morrisons sank 5%, a combined swing of £600m.
Bolland, who will join on 1 May, is doubling his possible remuneration to run a far smaller business. Big investors questioned the need to pay £7.5m in "compensation" for leaving Morrisons. The amount is usually paid in the new company\'s shares but unusually Bolland\'s agreement includes £1.6m in cash.
"We are opposed to this sort of golden hello" said a spokesman for PIRC, which advises shareholders on corporate governance issues. "It distorts the market for executives and compensating directors for the loss of bonuses and incentives at their previous company makes a mockery of the idea that the already high levels of remuneration act to retain key people."
Big City investors have been at war with the M&S board since it promoted Sir Stuart Rose to the post of executive chairman in 2008 – a double job that is seen to wield too much power. The new row illustrates that the company had failed to plan for Rose\'s retirement.
For more information, please visit
http://www.guardian.co.uk/business/2010/[...]arks-spencer-marc-bolland-pay1
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