The former Marks & Spencer boss more than doubled his salary to £2.63million last year after receiving his first bonus since 2017 as the cost of living crisis intensifies for customers.
Steve Rowe, who stepped down as chief executive last month, will not receive pay but will continue to be employed as a consultant paid up to £843,000. This may last for up to a year after the termination of full-time employment for M&S – after the group’s annual shareholders’ meeting on July 5.
He will also be able to cash in 2.85 million free M&S shares with a current value of around £4.1 million over the next few years, if the performance criteria are met.
The wage rewards emerged as M&S Chairman Archie Norman warned: “Over the next eight months, we expect the biggest reduction in real consumer income in decades.”
He said the expected reduction in real customer revenue would impact profits, but said “the test of a company’s quality is not whether it meets storms, but how badly it is resilient to overcome them”.
Norman added: “With the changes we’ve made, M&S is in much better shape and we’re off to an uptrend in sales.”
M&S’s remuneration committee said it had decided it was appropriate to award Rowe an annual bonus of £1.6m on top of his fixed salary and £1m benefits sterling despite the fact that he will work his notice period when awarded. He will receive half of his bonus in July and the other half will be held in M&S shares for three years.
“[Rowe] has worked tirelessly and with determination to deliver on the promise of transformation, as evidenced by our strong business performance in 2021-22,” said Andrew Fisher, Head of M&S Compensation Committee in the annual report.
The retailer pocketed around £62million in government enterprise rate relief during the year.
The group said 4,500 store management and head office employees would also receive a bonus for the first time since 2017, the end of Rowe’s first year in the role.
From April, M&S also raised the minimum wage for its store workers by more than 5% to £10 an hour and offered free health checks as it fights to secure staff in a tight job market.
Rowe’s replacement Stuart Machin will receive a salary of £800,000 while co-chief executive Katie Bickerstaffe will receive £750,000. Machin could receive nearly £5.5million in total salary if he hits performance targets, while Bickerstaffe could earn up to £5.1million.
Norman wrote in the retailer’s annual report that Rowe was leaving just as M&S faced an “inflection point in its history”.
M&S last month revealed pre-tax profits of £391.7million in the year to April 2, compared to a loss of £209million a year earlier, as sales rose 18.6 % to £10.9 billion.
“Not only have we emerged from the pandemic as a stronger company, but we are also at the end of the ‘laying the groundwork’ phase of our transformation. And we have a very dynamic new management team taking over from Steve Rowe, our long-serving chief executive,” said Norman.