• Shareholder group criticises staff pay disparity at major retailers

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  • 6 Jul 2015
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M&S and Sainsbury’s face potential rebellion over ‘excessive’ senior reward

Major retail chains Marks and Spencer (M&S) and Sainsbury’s are expected to face protests from shareholders and campaigners at their respective annual general meetings this week, over high remuneration for senior executives and low pay for staff.

Corporate governance group Pirc has recommended shareholders abstain from voting for M&S’ proposed remuneration report on Tuesday (7 July), which offers chief executive Marc Bolland the opportunity to earn up to 311 per cent of his salary in total rewards.

Pirc also criticised current pay policies, which could award individual executives up to 400 per cent of their salary in exceptional circumstances, as “highly excessive” and not “best practice”.

It recommended shareholders oppose the new executive share option plan that allows for awards to be accelerated when an executive leaves the business, or the company faces a takeover.

M&S reported its 14th consecutive quarterly drop in clothing sales in January 2015, but the employer is expected to announce a 0.5 per cent rise in food sales in the last quarter.

Sainsbury’s is also expected to come under fire at its AGM on Wednesday (8 July) after chief executive Mike Coupe’s £1.5m pay package (including bonuses) in 2014 was described as “excessive” compared to the average wage of a Sainsbury’s employee.

Low-pay campaigners ShareAction said a “considerable proportion” of employees at both retailers were paid below the living wage of £9.15 in London and £7.80 in the rest of the UK.

Pirc said it also had “significant concerns” about former chief executive Justin King’s termination arrangements, which could see him receive around £1.9m from outstanding share awards relating to the performance of the business in 2012/2013.

“It appears that [King] retained all his outstanding long-term incentive awards in full, subject to the achievement of performance conditions,” a statement from Pirc said.

“This is not considered acceptable as the awards should have been pro-rated for the period served.”

In May this year, Sainsbury's recorded its first profits fall in a decade with a £72m loss.

M&S and Sainsbury’s are the latest supermarket retailers to be grilled by shareholders after Tesco and Morrisons both faced opposition at their AGMs last week.

More than 18 per cent of shareholders failed to back Tesco’s remuneration report, which outlined the £4.13m pay package for new chief executive Dave Lewis for just six months’ work, and a £1.2m payout to his predecessor, Phil Clarke, who oversaw diminishing sales and profits.

More than a third (35.6 per cent) of investors at Morrisons voted against its decision to award a £1m bonus to former chief executive Dalton Philips, who was sacked from the company at the beginning of this year.

More news is expected after Marks and Spencer’s meeting on Tuesday and Sainsbury’s on Wednesday.

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  • I am in agreement tiwth the shareholders. We are in the culture of rewarding people irespective of results . Whilst the chief execs have a big remit wher are they ethically.

    The big retailers push back on suppliers expecting to see their supply chain doing the right thing by their employees, but same old, same old, not when it comes to themselves