British retailer Marks & Spencer announced a “golden hello” of up to £15m for new chief executive Marc Bolland, sparking renewed criticism over its boardroom practices.
The clothing, food and homewares retailer, which came under fire in 2008-09 for combining the roles of chairman and chief executive against corporate governance guidelines, said Bolland would start on May 1, ending a protracted wrangle with his previous employer, Wm Morrison Supermarkets.
Bolland will get a basic salary of £975,000, an annual bonus of up to 250 percent of his salary, and an award of shares under the company’s performance share plan which in 2010-11 will be worth 400 percent of his salary.
M&S will also compensate Bolland for a number of awards he forfeited by relinquishing his role as chief executive of Morrison, Britain’s fourth-biggest grocer.
“This is a bad start for the new regime at M&S,” said PIRC, which advises shareholders on corporate governance issues.
“We are opposed to this sort of golden hello. 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.”
Compensation
M&S saw off shareholder rebellions in 2008 and 2009 over Stuart Rose’s move to become both chairman and chief executive.
The group had hoped the earlier-than-expected naming of a new chief executive in November – analysts had not expected an announcement until this year – and widespread enthusiasm for Bolland would end the criticism.
M&S said Bolland would get £1.6m compensation in cash, and £1m worth of shares, for the loss of a bonus and Morrison share awards that would have vested in 2010.
He will also get £1m in shares and a performance share plan worth £3.9m to compensate for stock that would have vested in 2011 and 2012.
Bolland had been under contract at Morrison until November, but hopes he would be released sooner were raised when the grocer poached Dalton Philips from Canadian group Loblaw to become its new chief executive from March.
M&S’s Rose had said previously he hoped Bolland would be able to join the company by late spring.