The JD Sports Fashion executive chairman has been awarded a £6m cash bonus not linked to any future performance targets.
Peter Cowgill’s special bonus, to be paid in instalments of £1.5m a year for four years starting from October, each of which will be subject to income tax and national insurance, must be approved at JD’s annual shareholder meeting on 3 July.
The bonus, which is not linked to future performance measures, is likely to be controversial with pay campaigners and independent shareholders. Last year 15% of investors voted against the company’s remuneration report, which was criticised by a number of shareholder advisory groups.
However, JD Sports’ majority shareholder, Pentland Group, the owner of Speedo and Berghaus which controls 57.5% of JD Sports, is likely to wave the bonus through.
The payout to comes after the retail group, which looks set to join the UK’s biggest companies in the FTSE 100 next week, raised pre-tax profits by 15.5% to £355.2m in the year to 2 February as sales increase by almost 50% to £4.7bn largely thanks to expansion in the US and Asia.
The deal ensures Cowgill will be paid a minimum of £3.9m this year compared to £2.55m last year. If he hits undisclosed performance targets, he could earn up to £4.7m in total, more than the boss of Tesco, the UK’s largest retailer which makes annual profits of £1.67bn, five times that of JD Sports.
JD Sports’ remuneration committee said it was “confident that it is justified to recommend” the special bonus partly to compensate Cowgill for not receiving a long-term share bonus this year or last. The company said he was not intended to receive any such bonus in future and added that Cowgill had not received any pension contribution payments since 2013.
The committee pointed to the “exceptional performance” of Cowgill and “outstanding performance” of the company against strategic objectives including the launch of flagship stores in the UK, expansion into the US and strong profits growth and the group’s outdoorwear chains, which include Blacks and Millets, in an “exceptionally challenging year”.
Luke Hildyard, director of the High Pay Centre, which campaigns on excessive executive pay, said: “JD Sports is generally considered to have been successful under Peter Cowgill’s stewardship, but he has already been paid tens of millions as a result.”
He said the payout was particularly disappointing because the company’s annual report suggested the average wage for an employee had gone down last year.
“The store workers also contributed to the company’s success – wouldn’t it have done more for JD Sports, particularly in reputational terms, if they chose to spend an extra £6m or so on them instead of one individual executive,” Hildyard said.
