New criticism has emerged against the compensation package agreed for Peter Cowgill, the forceful executive chairman of JD Sports Fashion. A shareholder advisory service, Glass Lewis, is calling on investors to vote against the “inappropriate” pay policy of the company, which is controlled by the Pentland Group, at its annual meeting on July 1. The issue had already been raised at the company’s annual meeting in July 2019.
Cowgill, who has been running the rapidly expanding U.K.-based retail group for 17 years, was paid a total of £5 million (€5.8m-$7.1m) last year, although he volunteered for a Covid-based 75 percent cut on his normal salary. He got bonuses of £4.3 million (€5.0m-$6.1m) including an amount of £3 million (€3.5m-$4.2m) deferred from a special bonus granted in 2019.
Glass Lewis said that the company should have substantially reduced or scrapped bonus awards in view of grants obtained by the British government to compensate for temporary layoffs and and through reductions in business rates for its store leases.
While noting that JD paid taxes to the government, the company responded to the latest criticism with the following statement: “Over the past 12 months, JD has reviewed its Remuneration Policy, seeking external advice on best market practice for Executive and Senior Management remuneration. As a result of this exercise, the Group has undertaken a number of activities focused on maintaining effective, straightforward and market competitive remuneration, to ensure that its remuneration packages are appropriate in an increasingly competitive retail and digital sector throughout the UK and internationally, with the global recovery from the pandemic at the forefront. The Group’s remuneration packages also seek to retain and motivate the vital Senior Management team members who are a fundamental part of the Board’s succession and growth plans for the Group.
“The Remuneration Committee believes that the Group’s bonus and LTIP (=long-term incentive plan) outcomes continue to be reflective of the sustained outstanding performance of the Group. The posting of exceptional results during such a challenging climate demonstrates that the remuneration approach and steps taken throughout the pandemic continue to support and drive this performance.”
As previously reported, the group posted pre-tax earnings of £324 million (€377m-$457m) for the last financial year, well over analysts’ projections. JD recalls that the annual meeting held on July 3, 2019 had approved a special bonus of £6 million (€7.0m-$8.5m) for Cowgill to reflect the company’s “historic performance” and the fact that he had not been rewarded for its performance in the previous two years. The bonus was supposed to be paid in four equal instalments. Two of them were paid out before the pandemic, and the remaining two were delayed by the national coronavirus lockdowns, but were then paid together earlier this year, accompanied by a cut of 25 percent in Cowgill’s annual bonus in April 2021.
According to The Sunday Times, Glass Lewis is asking to oppose Cowgill’s re-election due to inadequate succession planning – an issue that JD has already addressed - and a lack of gender diversity in the company’s board. JD recently appointed Kate Smith, a former high-ranking executive of Adidas and VF Corp., to its board.