Daily Mail

Pay rise for Klarna chief despite record loss

- By Leah Montebello

KLARNA’S chief executive saw his pay soar to over £1m last year as the company racked up its biggest ever loss.

Sebastian Siemiatkow­ski ( pictured), the founder and chief executive of the buy-now-pay-later (BNPL) firm, was handed £1.05m in 2022 – a 35pc jump on the previous year.

The pay rise came despite Klarna plunging to a loss of £830m, the biggest since the firm was set up in 2005 and far worse than the £522m loss in 2021.

The bleak figures came amid mounting scrutiny of the BNPL industry as it explodes in popularity among shoppers who cannot afford to or do not want to pay for goods in full up front. It is feared many users – particular­ly the young – are unknowingl­y building up debt which they will struggle to pay off amid the cost of living crisis.

However, analysts suggested that any regulatory clampdown on the industry could work in favour of the big players such as Klarna as smaller ones fold.

The privately owned Swedish company saw its valuation slashed 85pc from £38bn to £5.5bn in a funding round last year. It also axed 700 staff in two rounds of layoffs. Announcing 41-year-old Siemiatkow­ski’s pay alongside its results yesterday, Klarna said its remunerati­on policy was in line with other tech firms ‘in order to hire and retain the best talent’. Klarna was regularly profitable until it started an aggressive rollout in the US four years ago.

Although the States is now its largest market by revenue, Klarna has not posted an annual profit since 2018, with marketing and employment costs taking their toll.

Klarna was more upbeat about the fourth quarter of 2022, where losses narrowed to £150m from £364m a year earlier.

Credit losses, which are incurred when customers do not pay back what they owe, were down 18pc to £110m.

With this in mind, the company said its goal was to return to profitabil­ity by the summer of 2023.

Founded in 2005, Klarna has exploded in popularity in recent years, allowing customers to split the cost of purchases into instalment­s, often with no interest or charges unless they fail to pay back on time. The method of payment is popular with younger shoppers and in sectors such as clothing and fast fashion. Klarna has partnershi­ps with major brands, including Nike, H&M and IKEA. But the BNPL industry, which includes other major players such as Clearpay and Laybuy, has come under growing scrutiny. Research by Barclays Bank and the debt charity StepChange last year found almost a third of BNPL borrowers said their loans had become unmanageab­le.

BNPL products have been classed as ‘high-risk’ by the City watchdog alongside other unregulate­d investment­s such as crypto- currency. The Treasury unveiled draft proposals this month that would allow the Financial Conduct Authority to ban firms that failed to conduct adequate credit checks on customers.

The Government plans to put legislatio­n before Parliament later this year.

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