Financial News

  • 28 March 2014, 12:08

Morrisons Chief Waives Bonus After Sales Fall

Dalton Philips, the chief executive of Wm Morrison, has become the latest FTSE-100 boss to waive his annual bonus in the wake of poor trading and other problems at the supermarket chain.

Sky News has learnt that Mr Philips was awarded a 374,000 bonus by Morrison's remuneration committee, half of which he would have been eligible to receive in cash immediately.

The other 50% of the award would have been in shares and subject to a three-year deferral period.

Insiders said on Thursday that Mr Philips had opted to waive the entire award following the announcement of a 176m loss for last year and a warning that profits in 2014 would be about half the level they reached in 2012.

Morrison's shareholders are expected to welcome Mr Philips' decision, although some may also question the wisdom of board members' decision to make any award to him in such a difficult year for the UK's fourth-biggest grocer.

In addition to its slump into the red, Morrison's has recently been forced to deal with the theft of personal data from 100,000 of its employees, and has written off substantial sums on disappointing acquisitions such as Kiddicare, the online baby goods retailer.

A person close to the company pointed out that the criteria for executive bonuses was set out explicitly by Morrison's board and that the 374,000 was a reflection of the chief executive's performance against those criteria.

60% of Mr Philips' bonus is dictated by the retailer's profitability, with the remainder split equally between strategic progress and 'personal goals'.

Mr Philips, who is thought to be the first chief executive outside the politically-toxic sectors of banking and energy to waive his bonus this year, is understood to have missed out on the first criterion and been awarded modest sums for the latter two.

Antony Jenkins, the boss of Barclays, Ross McEwan, Royal Bank of Scotland's new chief executive, and Sam Laidlaw, who heads Centrica, have all given up their awards for 2013.

Under the terms of his contract, Mr Philips is entitled to an annual bonus of up to twice his 850,000 basic salary.

On Thursday, Morrison's said its new finance director, Trevor Strain, had been awarded just over 50,000 deferred shares and had purchased 23,500 shares under his bonus arrangements.

The chain has pledged to spend 1bn over the next three years on cutting prices to compete more effectively against the likes of Aldi and Lidl.

The immediate hit to earnings triggered by that price-led assault may mean that Morrison's remuneration committee will have to rethink the company's executive bonus scheme, given that under its existing terms, top managers are unlikely to hit their targets.

Such a rethink could, though, inflame tensions with investors at a time when all of the UK's major supermarkets are under pressure.

A Morrison's spokesman declined to comment.

Separately, Centrica, the owner of British Gas, confirmed on Thursday that it had awarded just over 6.6m in total remuneration to its executive directors last year, a 60% fall on the previous 12 months.