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Terry Duddy under fire as Home Retail Group reveals bonus figures

The pay and performance of Terry Duddy, chief executive of Home Retail Group, is poised to become a focus for some shareholders in the retailer after the group’s annual report showed that he received a £217,000 bonus in the year to March.

Although this was less than the £301,000 Mr Duddy received the previous year, which has led his pay overall to drop from £1.16m to £1.1m, some shareholders expressed concern about the payment of a bonus, given that Home Retail announced a 60 per cent fall in pre-tax profit in the year to March 3 and scrapped its final dividend.

One top 10 shareholder said that the bonus payment was “ridiculous” given Home Retail’s performance.

“I would guess most shareholders would be pretty upset with that. It’s beyond belief,” he said.

However, another big shareholder pointed out that this week Mr Duddy spent £23,000 acquiring 160,000 shares in the owner of the Argos and Homebase chains.

People familiar with the situation said that the bonus payment had been triggered by the level of Home Retail’s cash generation and had not reached its maximum potential.

The bonus element that related to profit was not triggered.

If Home Retail does become a focus for shareholder anger – as tensions between investors and companies erupt into the public arena – it would not be the first time its pay policy has come under scrutiny.

Three years ago, 40 per cent of investors in Home Retail refused to approve its remuneration report in protest at changes to its pay plans.

Pay and performance in the retail sector was forced into the spotlight last week when Philip Clarke, chief executive of Tesco, elected to waive his £372,000 bonus after the retailer’s first profit warning in 20 years in January.

Next week Marks and Spencer’s annual report will also be published, which will give details of chief executive Marc Bolland’s remuneration. Pay has in the past been a flashpoint for M&S investors.

The Financial Times revealed this week that the group had suffered a sharp slowdown in clothing sales in the first seven weeks of its new financial year.

Mr Bolland is not expected to waive his bonus. However, he is not likely to achieve his full bonus payment, which could earn him up to £2m, given the fall in M&S’s pre-tax profit in the year to March 31.

Some 60 per cent of the cash bonus is based on pre-tax profit performance, with the remainder based on his personal objectives.

However, Mr Bolland is expected to receive £1m of shares under the deal he agreed in 2010 that compensated him for shares he would have received at his previous employer, Wm Morrison.

As part of the deal, he could also receive up to £3.9m in shares, under a plan based on the growth of earnings per share above the rate of inflation over the past three years, including the year to March 2012.

Source : Andrea Felsted – Financial Times
www.ft.com/cms/s/0/3eb4b78a-ac09-11e1-a8a0-00144feabdc0.html#axzz1wci97NV0

01 June 2012
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