Morrisons boss Dalton Philips refuses his £374k bonus

By Michael Stones

- Last updated on GMT

Related tags Money

Dalton Philips will be £374,000 worse off, after refusing his bonus payment
Dalton Philips will be £374,000 worse off, after refusing his bonus payment
Dalton Philips, chief executive of the beleaguered retailer Morrisons, has refused his £374,000 bonus payment.

A spokesman for Morrisons told “We can confirm though that Dalton did decline to be considered for a bonus this year.” ​But no reasons for the decision were given. 

Philips was scheduled to have collected half of his bonus in cash and half in deferred shares. The money was due, under an arrangement with the retailer’s remuneration committee, after he achieved certain targets, including the launch of Morrisons’ online shopping service.

The bonus payment was in addition to Philips’ basic salary of £850,000.

Gloomy financial performance

His decision to forgo the bonus payment follows gloomy financial performance for the retailer and a change of strategy to slash costs and sell property to fund lower product prices, in a bid to confront hard discounters Aldi and Lidl.

Earlier this month Morrisons reported a £176M loss in full year results to February 2, after a profit of £879M in the prevous reporting period. Underlying profit before tax slumped by 13% to £785M, while turnover fell by 2% to £17.7bn, following what chairman Sir Ian Gibson acknowledged was “a disappointing year”.

City analysts were more outspoken in their assessments of Morrisons’ results. The outlook statement accompanying its results, posted on March 13, was “truly awful”,​ according to Panmure Gordon. It’s analyst Graham Jones, executive director of equity research, warned of the retailer’s “profits collapsing next year under the weight of a price war”.

Shore Capital remained unconvinced by the retailer's explanation that under-representation in the convenience and online channels were responsible for the profit fall. More fundamental factors were at work, said its analysts Clive Black and Darren Shirley.

'Ostracised core customers'

“We believe Morrisons has ostracised core customers​, while failing to attract new footfall in an increasingly competitive market,”​ they said. “In our view, the key driver of this process has been ‘Fresh Formats’, which was particularly ill-timed given the growing popularity of limited range discounters and high street value stores.”

The Economist Intelligence Unit thought Morrisons's price cutting strategy risky. Jon Copestake, retail analyst with the unit, warned: “Tighter margins and lower prices will dent profitability and could undermine some goodwill towards the retail brand.

“There is also the risk of price wars with the likes of Aldi and Lidl that could prompt a damaging race to the bottom​ on price.”

Morrisons’ vertically integrated business model – which involved the business owning large sections of its supply chain – has also drawn widespread criticism from industry analysts.

Meanwhile, the pay and bonuses of Britain's top bosses have come under increasing scrutiny during the past year. Many bosses were perceived to have pocketed bonus payments despite failings in the businesses for which they were responsible and others have refused extra payments.  

Barclays chief executive Anthony Jenkins declined his bonus payment last month.

In January Justin King, Sainsbury chief executive, opted to change a £17M cash bonus into shares, in order to underline his confidence in the retailer. King also announced his intention to quit​ the retailer this July.    

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