Next boss gives his bonus to staff


Next Plc CEO Simon Adam Wolfson

Lord Wolfson, the chief executive of Next, will give millions of pounds of his bonus away to 20,000 members of staff. The average staff member will receive £200 as a result of the gesture.

It's the second time Lord Wolfson has done this: and he's not the only executive to use his pay and bonus to make a statement.

Lord Wolfson, the Conservative peer, was due to get the £4 million as part of a share-matching plan - which executives get when they convert their cash bonus into Next shares.

The amount executives receive depends on how the shares and the company are performing (measured through 'earnings per share'). The trebling of the company's share price and the 65% rise in earnings per share led to a bumper bonus.

Sky News reported that as a result he wrote to staff saying that his bonus "has become more valuable than I could possibly have hoped". He added that: "I am also in the very fortunate position to have significantly benefited as a shareholder." "In these circumstances, instead of accepting the award, I have asked the board if they will share it amongst all those who have worked for the company during the three year...period 28 April 2011 to 28 April 2014."

The Guardian said that staff will receive a bonus on a pro-rata basis equivalent to 1.5% of salary. A shop floor worker who receives £6.33 per hour and works a 40 hour week will get £197.49.

According to Drapers, he added: "I hope you will accept this bonus as a personal gesture of thanks and appreciation for all your hard work and dedication to Next through testing economic times."

The amount is even higher than the £2.4 million he gave up last year. It's not known how much this gesture will leave him with - although it's expected to be more than £1 million.

Generous executives?

He's not the first executive to have made a statement with his reward package. He's not even the first CEO to give some of his bonus to staff. The chief executive of Lenovo, a computer firm in China, has been giving away a portion of his bonus to staff since 2011. In September last year he gave $3.35 million of his $4.23 million bonus to 10,000 staff. The average employee received $325 - which is roughly the average monthly wage in China.

Others have chosen to give the cash to charity. Earlier this month Sam Laidlaw, the chief executive of Centrica, gave his £851,000 cash bonus away to charity. However, that news was somewhat diluted by the fact that days later he received shares - which will be worth £1.9 million in three-years' time - under a long term incentive scheme.

But the most common statement for executives to make is to receive a token salary - to demonstrate their long-term commitment to the business. Mark Zuckerberg recently accepted just $1 in salary as head of Facebook. That's down from $500,000 a year earlier. And although long term awards and options helped to make up for it, it effectively gave off a clear message that the CEO has long-term faith in the business.

It's worth pointing out that Oracle founder and CEO Larry Ellison also has token $1 salary, but last year made more than $150 million exercising stock options - so they're not going without.

But there are interesting exceptions to the rule. Richard Kinder, of Kinder Morgan (a US energy company) receives a salary of just $1 - and no bonuses or share options. He even reimburses the company for the cost of his health insurance and parking. However, he can afford to do this because he's still receiving multi-millions from stock options in previous years.