Ever wondered what it takes to earn a £100 million bonus? Frasers Group is making some interesting adjustments to their CEO’s incentive plan. While Michael Murray missed his initial target, a new scheme could still see him net the massive payout by 2030. Is this a shrewd corporate move or a sign of shifting goalposts?
Frasers Group, the prominent retail conglomerate, has unveiled a revised executive bonus scheme, significantly adjusting its share price targets. This development comes as CEO Michael Murray faces the prospect of missing a substantial £100 million bonus under the existing framework, prompting the company to recalibrate its long-term incentive strategy.
Under the original terms of the executive bonus plan, Mr. Murray’s eligibility for the lucrative payout was contingent upon two critical conditions. The first required the Frasers Group to achieve a pre-tax profit of at least £500 million, a target that the conglomerate successfully surpassed. The second, however, mandated the company’s share price to reach £15 for a sustained period of 30 consecutive dealing days, a key element of corporate governance.
Despite the Frasers Group reporting robust underlying pre-tax profits of £560.2 million for the year ending April 27, the crucial share price benchmark remained elusive. With Frasers stock trading at approximately £6.80 at the time of writing, the £15 target proved unattainable within the stipulated timeframe, effectively sidelining the £100 million executive bonus under the initial structure. This became significant business news.
In response, and ahead of its upcoming annual general meeting, the Sports Direct owner has proposed a new five-year bonus scheme. This revised plan introduces a lowered share price target of £12, a notable reduction from the initial £15. This strategic adjustment could still pave the way for Michael Murray to secure the substantial £100 million payout by the year 2030, offering a renewed incentive pathway.
Explaining the rationale behind this amendment, Frasers Group’s committee underscored the challenging current macroeconomic and political environment as a primary factor. They deem the £12 share price target as an appropriate benchmark for all executive share scheme awards, including those for the chief executive, reflecting a pragmatic approach to corporate governance in a volatile market.
It is important to note that even with the revised figure, the £12 share price target remains ambitious. The company highlighted that this new goal still surpasses the highest share price achieved by Frasers in the past five years, which stood at £9.49, indicating a commitment to significant future growth for the Frasers Group and its executive bonus structure.
Further enhancing its corporate structure, Frasers Group also announced a significant appointment alongside details of its new bonus plans. The former head of Britain’s audit watchdog is set to join the firm as chairman next month, signaling a potential bolstering of its oversight and strategic direction in the evolving business news landscape. This move underlines the company’s broader efforts in enhancing its board’s experience and corporate governance practices.
