Comment: Next Boss Wolfson’s bonus decision has wider implications

Next boss Lord Wolfson’s decision to share a £2.4m bonus with staff was not only eye-catching, it caught the mood of the times too.

Executive pay usually makes the headlines for all the wrong reasons, such as a perceived reek of excess or reward for failure. The irony in Wolfson’s case is that his decision to divvy up the bonus came on the back of tremendous success and few would dispute that he would have been entitled to his money.

Next is now the fourth biggest retailer by market cap. Last year, underlying earnings per share were up by almost 17% and that was the fourth year in a row that EPS and the dividend increased by more than 15%.

City success has reflected retail success. Next has steered a deft path through tough trading times and made the most of multichannel opportunity. There is little reason to expect that to change.

The mantra that ‘we’re all in this together’ has so far been applied to the strictures of austerity, but Wolfson has turned that on its head by distributing the fruits of success. His decision will lift morale on the shopfloor, helping to ensure the retailer continues on an upwards path.

There’s a danger that employees might come to expect such generosity to become standard, or that other successful company directors might feel pressure to replicate Wolfson’s action. But such concerns must be outweighed by the benefits likely to be felt elsewhere. Directors can expect increasing investor opposition if they trouser massive bonuses when performance is mediocre.

Spring in Carpetright’s step

While the late spring hit some retailers, notably in fashion, Carpetright benefited and was able to post a 5.6% rise in fourth-quarter like-for-likes at its core UK business.

But the real reason for the increase was self-help measures such as store modernisations and enhanced ranges.

It’s evidence again that retailers need not remain slaves to circumstance, even when times are hard.