Morrisons bonus bonanza goes on... even if sales fall

Chief executive set to reap millions as revenue targets are slashed by £2bn

THE chief executive of supermarket group Morrisons is in line to pocket a multi-million pound bonus – even though the company is expecting sales to fall.

Under new objectives David Potts and his fellow directors will not be expected to increase grocery sales over the next three years from the £13billion achieved in the year to February.

The previous remuneration scheme dictated that a bonus linked to sales would have been payable if sales rose to £15billion by 2017. But the company has now promised to begin paying out bonuses in 2018 if sales stand at just £12.7billion. The company has already consulted major shareholders about the bonus plan. But the decision is likely to reignite criticisms over executive pay at the retailer.

In January, Morrisons ejected its previous chief executive Dalton Philips, who presided over a collapse in profits after being blindsided by the expansion of German discounters Aldi and Lidl. More than a third of investors rejected the last pay plan after it was revealed by The Mail on Sunday in March that Phillips would get a £3million pay-off.

Potts was allotted 1.3million shares in April as part of the executive Long Term Incentive Plan, which at the time were worth £2.6million – more than three times his salary. The value of the company’s shares has since dived by a quarter. At the time the shares were awarded to Potts the group did not reveal the targets at which the bonus would be released.

A spokesman for Morrisons said last night: ‘These targets reflect that we are operating in an extremely competitive market, where we are reducing prices and running a business with a smaller number of stores as we concentrate on our core supermarkets.’

Morrisons has increased the portion of the longterm bonus linked to increasing free cash flow, which it says will create a healthier business and cut unnecessary spending by directors.

The company has more than 500 stores and is the fourth largest supermarket group behind Tesco, Sainsbury’s and Asda – which some experts believe place it at a disadvantage.

A restructuring plan driven by Potts and chairman Andy Higginson, both former Tesco directors, has resulted in the closure of 21 supermarkets and the sale of its convenience chain.