Retail news round-up on June 5, 2015: Pension experts warns on BHS deficit, Tesco eyes South Korea unit sell-off, M&S boss bags bonus, Sainsbury’s boss misses out on bonus, Morrisons faces shareholders’ wrath
New owners could find tough to trim BHS pensions deficit
BHS’s new owners are likely to be facing a £160m hole in the company’s pension scheme, warned independent pensions consultant John Ralfe as company accounts revealed that the retailer’s underlying pension deficit had climbed to £139m for the year ended August 30. He also said that it would be tough for Retail Acquisitions to trim the deficit. He believes that, as at March 2015, the underlying deficit could have sunk a further £20m into the red.
Ralfe told The Independent: “The £139m pre-tax deficit at August 2014 would likely have risen to at least £160m by March – a higher value of assets will be more than offset by a higher value of pension liabilities, as long-term interest rates fall to new lows.”
Tesco hires HSBC to work on South Korean sell-off
Tesco has appointed bankers at HSBC to explore options for the potential sale of its South Korean operations, in the first step to offload its Asian assets. Industry sources have said the South Korean operations could be valued at around $6bn (£3.8bn), according to Reuters, which first reported HSBC’s appointment. Private equity firms such as KKR, Carlyle, CVC and TPG as well as Asian buyout firms including MBK Partners could be interested bidders in the South Korean business.
M&S boss gets bonus for the first time in two years
Marks & Spencer has handed its chief executive Marc Bolland a bonus pay-out of £596,000 for the first time in two years after Britain’s biggest clothing retailer increased its profits, The Telegraph reported. His pay rose by a third from £1.6m to £2.1m in the last financial year. He was also awarded shares worth £2.4m, taking his total remuneration to £4.5m.
The biggest bonus payout was received by Rowe, the head of food. He secured a bonus payment worth 60% of the maximum available. The M&S executives, who also include marketing boss Patrick Bousquet-Chavanne, the head of general merchandise Dixon, and Wade-Gery, have been awarded an average salary increase of 3% for the new financial year.
Sainsbury’s chief Mike Coupe receives no annual cash bonus
Sainsbury’s chief executive Mike Coupe has missed out on annual and long-term bonuses last year after the business was hurt by fierce competition, price deflation and a groceries price war. Coupe was handed salary, benefits and pension contributions of £1.05m, as well as £458,000 in deferred shares. He received no cash bonus for the year to March 2015, nor did he qualify for a three-year performance payout.
Morrisons suffers investor wrath over £1m bonus to ousted chief
Shareholders at Morrisons protested over a £3m pay-off to its sacked boss Dalton Philips, The Guardian reported. More than one in three investors voted against handing its Philips a £1m bonus. More than a third of shareholders voted against the supermarket’s remuneration policy, an unusually high number, according to proxy voting results revealed at its annual meeting.
The grocer’s chairman Andy Higginson told shareholders at the meeting that he felt the bonuses earned by directors including Philips and finance director Trevor Strain were “deserved”. Higginson added Philips had been paid the minimum amount to which he was contractually and legally entitled.