Morrisons has significantly raised chief executive David Potts’ remuneration after shareholders pushed for a pay rise, despite ongoing debate surrounding corporate governance and executive pay.
Since Potts became the boss of the grocery chain just over two years ago, Morrisons’ fortunes have improved dramatically, its sales decline was reversed and its dividend restored.
Shareholders rewarded him by giving him a maximum £5.3 million total pay package through a long-term incentive plan (LTIP) of up to 300 per cent of his base salary, compared to 240 per cent as it was previously.
He is also in line to receive a 200 per cent bonus of his £850,000 salary, although he must defer half of this into Morrisons shares for three years. He also has to hold 250 per cent worth of his salary in the grocer’s shares.
The pay rise is a dramatic increase compared to Potts’ £2.8 million salary in 2016 and £2.3 million in 2015, according to Morrisons’ annual report.
The news comes after a parliamentary business select committee last month said LTIPs should be banned from next year.
The cross-party group of MPs said these pay schemes led to “perverse” incentives and urged companies to find more ethical replacements for LTIPs.
“It is no coincidence that Morrisons’ much improved performance coincides with the appointment of David and his new senior team,” Morrisons chairman Andrew Higginson said.
“Morrisons’ skilled food makers and shopkeepers are loyal, passionate and dedicated, and virtually all are unchanged since David started.
“Whilst all have contributed to the improved performance, it is the leadership that has changed.”