Simon Wolfson, the incoming chief executive of Next, received a record compensation package exceeding £7 million last year. His earnings could rise to as much as £9.27 million this year, following the retailer’s announcement regarding an increase in his base salary and bonuses.
The publicly traded company revealed plans to enhance the remuneration of its long-serving leader, who oversees a range of brands in the UK, including Gap, Victoria’s Secret, Cath Kidston, Reiss, and FatFace. Wolfson’s pay package was found to be approximately 30% lower than the average compensation for executives in FTSE 100 companies.
According to the board members on the remuneration committee, the adjustments were warranted as Next has consistently delivered shareholder returns that surpass those of other prominent listed firms over recent years. The committee noted in its annual report released on Thursday, “In light of this sustained outperformance, the committee believes that the current remuneration levels do not adequately reflect performance.” They also highlighted the necessity for increased pay to “retain and motivate its high-quality management team, support effective succession planning, and facilitate external recruitment when needed.”
Last year, Wolfson’s earnings rose from £4.9 million to £7.4 million, driven by a basic salary of £967,000, a maximum annual bonus of £1.45 million, a long-term bonus of £4.7 million, alongside pension contributions and additional benefits, including a company car with a driver.
This year, Wolfson’s base salary is set to increase by 3%, bringing it to £1 million. However, his maximum annual bonus potential will increase to 200% of his salary, up from the previous cap of 150%, and his long-term bonus potential will also rise to 400% of salary, compared to 225% before. The criteria for the long-term bonus will focus on growth in earnings per share and dividends.
The company announced it would discontinue its previous method of measuring total returns to shareholders against 20 other listed retailers due to the increasing difficulty in identifying suitable comparable businesses, given that many retailers have failed over the past two decades.
The long-term bonus potential for other non-executive directors at Next will increase to 300% of their salaries, and the company indicated its intention to retain the option of raising their annual bonuses to 200% of salary from the current 150%. Currently, four out of five executive directors at Next already earn over £3 million, inclusive of bonuses.
In spite of concerns about potential inflation and a decline in consumer confidence arising from the conflict in Iran, Next raised its profit forecast by £8 million to £1.2 billion for the fiscal year ending January 2027, following stronger-than-anticipated sales in January. The retailer reported its first £1 billion profit last year.
Founded in 1982, Next originated when Hepworths, a men’s suiting retailer established in 1864 by tailor Joseph Hepworth in Leeds, acquired the women’s clothing chain Kendall & Sons and embarked on a transformation of the brand.
