Lord Simon Wolfson, the boss of the Next fashion and homewares chain, received a 28% pay increase last year to almost £3.4m despite forgoing his annual bonus and taking a cut in basic salary.
Next said it did not feel that paying out an annual cash bonus, which amounted to £350,000 for Wolfson the year before, was appropriate given that the company had not paid dividends to shareholders. Wolfson and other directors and top managers in the business also took a 20% cut in basic pay between April and June when many workers were on furlough.
However, the retailer’s non-executive directors did sanction a total of £2.4m in long-term share bonus payments to Wolfson relating to the three years to July 2020 and to January 2021. That came despite the company claiming £120m in a business rates holiday and millions more in furlough payments for thousands of staff from the government while shops were closed. Next has not opted to pay back any of this support, unlike some rivals including Primark.
The board said they had decided to make the full long-term bonus payments due as “financial data shows Next is performing well in exceptionally challenging circumstances”. The board the performance targets behind the bonus were “more demanding than market norms” while actions taken by the team meant Next was “well placed to take advantage of the opportunities of the ongoing structural shift in spending from retail stores to online as well as investment and acquisition opportunities arising from the pandemic.”.
Under the terms of the payment, Wolfson, 53, who has run Next since he was 33 when he became the youngest chief executive of a FTSE 100 company, must hold on to those bonus shares for two years until he can sell them.
The board said it had decided not to scale back the payments as the performance period and two-year lock-in on the shares awarded under the scheme extended beyond the impact of the pandemic.
The company has also bumped up the future long-term future bonus for Wolfson to up to 225% of his base salary, from 100% in the past under a scheme approved last year. That increase, as well as a 0.6% rise in basic salary to £805,000, means that Wolfson could earn up to £5m this year, although only a fifth of that is fixed pay.