M&S investors angry over Bolland’s £15m pay deal
Marc Bolland is living up to his ‘billion dollar man’ moniker after securing his hefty ‘golden hello’
When Marks & Spencer poached Marc Bolland, the suave and successful Dutch-born chief executive of Morrisons, it was hailed as a coup. Bolland was even dubbed the "billion dollar man" after news of his appointment saw M&S shares rise by six per cent while Morrisons dived by five per cent, a combined swing of £600m.
But M&S investors and staff will no longer be feeling so smug after it emerged that Bolland has been handed a £15m pay package to join the ailing high street retailer. Despite the current recession and calls for restraint over boardroom pay packets, the deal is believed to be one of the biggest 'golden hellos' in corporate history.
In his first year at M&S Bolland will earn at least £8.5m, including £7.5m to compensate him for lost pay and shares that he would have received at Morrisons. The package also includes an "exceptional" award of shares worth nearly £4m. On top of this, Bolland stands to earn a bonus worth up to £2.5m.
When he joins M&S on May 1, Bolland's basic salary alone - £975,000 - will be 77 times the average pay of the retailer's staff. According to its last annual report, M&S's 77,800 employees earn an average of £12,500.
M&S hired Bolland - the former Heineken marketer who turned Morrisons around to become the fastest growing supermarket in the UK - to revive its flagging food business. Bolland was also replaces Sir Stuart Rose in his capacity as chief executive (he remains executive chairman). Rose's 'double post' had angered investors and the board had hoped Bolland's appointment would soothe them.
But now some of M&S’s biggest investors are questioning Bolland’s hefty golden handshake, in particular the “compensation” part of the deal. This is usually paid in the new company's shares but, unusually, Bolland's agreement includes £1.6m in cash.
Critics also say that the deal flies in the face of demands for restraint when it comes to executive pay packets. PIRC, which advises shareholders on corporate governance issues, said the package "distorts" the market. "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," a spokesman said.