Woolies execs again get no bonuses
PRESSURE: CEO MUST MAKE DAVID JONES PAY OFF
After shareholder displeasure with its remuneration disclosure, group changed policy.
After shareholder displeasure with its remuneration disclosure, group changed remuneration policy.
Executives at Woolworths Holdings have largely not been paid short-term incentives for the third year running. Only a single executive – Zyda Rylands, Woolworths SA CEO – was paid a short-term incentive bonus for the year ended June 30, 2019. Rylands received a bonus of R2.1 million for the turnaround in the Woolworths SA business.
However, despite the performance multiplier of the SA unit triggering a bonus of 50% of her guaranteed pay of R8.9 million, the remuneration committee agreed to reduce the group’s short-term incentive bonus pool by 50% “to align with budgeted growth expectations”. After the cuts, SA management shared short-term incentives equivalent to 1.55% of group adjusted profit before tax (aPBT) of R4.062 billion (R63 million), while store staff shared 1.18% (R48 million) and its supply chain staff shared a pool of 0.20% of aPBT (R8 million). The group says its bonus pool for this year (2020) has been reduced by 50% in Woolworths SA, 50% in Country Road Group and 65% in David Jones.
Except for Rylands, the last time CEO Ian Moir or any other executive director received a short-term incentive payment was 2016. Then Moir was paid a short-term incentive bonus of R14.96 million with guaranteed pay of R16.6 million.
He has come under pressure to make the acquisition of Australia’s David Jones deliver (the group had to impair the value of David Jones by R13 billion in the 2018 and 2019 financial years). The board has requested that Moir spend more time in Australia until the business is turned around.
Moir has 1.8 million unvested shares under the group’s longterm incentive scheme, with a fair value figure of R35 million. For these to vest, performance across headline earnings per share growth, return on capital employed and total shareholder return will be measured. Given its size, these are (effectively) directly linked to David Jones’s performance.
Over the last four years, the group’s market capitalisation has reduced by R36 billion to R51 billion as at June 30. In full-year 2019, the group missed the longterm incentive trigger of greater than 93% of adjusted profit before tax by just 10 basis points, achieving 92.9% of profit before tax, “adjusted for impairment of David Jones assets, relocation costs (net of grants received) and store exit costs, net onerous lease provisions raised and unrealised foreign exchange losses incurred/ reversed”.
Still, executives received their annual rolling allocations of long-term incentives under a plan revised in 2019. Moir received restricted share plan awards with a face value of R28.5 million in the year. This equates to 150% of his guaranteed package. Finance director D Reeza Isaacs, chief operating officer Sam Ngumeni and Rylands received awards in the performance share plan with a face value totalling R20.6 million (equivalent to 100% of guaranteed pay).
Following shareholder displeasure with its remuneration disclosure, the group changed the remuneration policy.
Only one executive gets shortterm 2019 bonus