The outgoing chief executive of the discount retailer B&M earned £5m last year – more than the boss of Tesco.
Simon Arora’s pay package rose by more than a third to the highest level ever for the company – and 270 times that of the average B&M worker – despite flatlining profits and falling sales in the year to the end of March as more rival shops reopened from the Covid pandemic. B&M enjoyed “essential retailer” status during the lockdowns.
Arora, who is to step down next year, booked a long-term share bonus worth £2.6m and an annual bonus of £1.5m, half of which is paid in shares, on top of his basic salary of £810,000 before benefits such as a company car and pension payments. He will not be able to cash in the share bonus until August 2024.
The pay package was more than the £4.75m Tesco paid its chief executive, Ken Murphy, l'anno scorso. Murphy’s pay included the highest annual bonus awarded by the supermarket since 2016.
Tesco has a market value of nearly £19bn, compared with B&M’s £4bn.
B&M’s remuneration committee awarded Arora the maximum long-term bonus possible after the company met targets on returns to shareholders and the performance of its share price compared with similar businesses.
He only missed out by just over 4% of the maximum possible annual bonus after taking longer than expected to launch B&M’s transactional website and missing underlying sales growth targets.
B&M’s remuneration committee said in its report: “The committee considered that overall performance had been very strong during 2021-22 and that the [annual bonus] outcomes appropriately reflected individual and business outcomes. No discretion was used in assessing the outcomes.”
A spokesman for Usdaw, the shopworkers union, disse: “Retail industry chief executives are some of the highest paid across the economy. Even in light of the crisis on our high streets, the discrepancy between chief executive pay and business performance has continued to widen.
“Staff are being asked to bear the brunt of pressures on businesses through fewer hours, restructures and job losses, while directors continue to receive substantial increases in pay. That is incredibly frustrating and can be demoralising, so there needs to be a different approach. The focus of remuneration policy should be on improving pay for retail staff who serve the customers.”
Arora has been awarded a 3% pay rise for the current year taking his basic salary to £834,300 with the potential to earn up to double that on his annual bonus.
tuttavia, Arora, who has led B&M for nearly two decades, is scheduled to be replaced as chief executive by Alex Russo, currently B&M’s finance director, whose salary will rise from £500,000 to £800,000 when he takes the top job.
The latest multimillion-pound pay package has emerged after a string of shareholder rebellions over high pay at a time of hefty food inflation driven by rising energy and basic commodity costs.
Tesco has been criticised for high pay while Sainsbury’s is expected to face scrutiny at its annual meeting next week after it emerged that chief executive, Simon Roberts, received pay worth £3.8m after it rejected calls to ensure all workers in its stores receive a living wage.
Quasi 30% of shareholders in Ocado rebelled against high pay for directors at the online grocery specialist last month after it laid out a plan to pay the chief executive, Tim Steiner, up to £100m over the next five years. Just over a third of voting Boohoo shareholders last week came out against the group’s remuneration report, which revealed that the chief executive, John Lyttle, was paid almost £1.4m last year after he was awarded a generous bonus despite missing targets.
The Equality Trust, the High Pay Centre and Trade Union Congress wrote to FTSE-350 companies last month asking them for restraint on executive pay.
The letter asked companies to commit to no increases to fixed pay for executives this year, and for annual bonuses and long-term incentive payouts to be distributed among low-paid workers to help them cope with unprecedented rises in the cost of living.