Morrisons has reduced the sales target for its executive bonus scheme by almost £2bn, as the troubled grocer continues to attempt a turnaround.
The business’ long-term incentive plan (LTIP) targets have been adjusted, meaning chief executive David Potts could receive a multi-million pound bonus if sales climb just £300,000 from their 2014/15 level in three years.
According to Morrisons’ annual report, Mr Potts could earn 240 per cent of his base salary which is £850,000 for the current year, if targets are met, meaning a bonus of around £2m.
Previous LTIP rules required total sales excluding fuel and VAT of £15bn to be reached in the 2016/17 financial year, along with £2bn cumulative cash flow over a three-year period and 17p earnings per share.
After a review, the sales target has been adjusted downward, meaning executives will receive their bonus if £13.3bn sales are reached in 2017/18. The cumulative cash flow target has been dropped to £1.6bn in the next three years, while earnings per share has been lowered to 15p.
The Yorkshire Post understands the targets were reviewed in light of the supermarket’s decision to dispose of its convenience business and close 21 underperforming stores.
Morrisons confirmed it would reduce its estate earlier this year, having recorded a £792m loss for 2014/15.
A Morrisons spokesman said the new incentive plan, which has been approved by shareholders, reflects the firm’s decision to lower prices to remain competitive.
He said: ‘These targets reflect that we are operating in an extremely competitive market, where we are reducing prices and running a business with a smaller number of stores as we concentrate on our core supermarkets.”
Earlier this year, Morrisons was criticised for the £3m awarded to former chief executive Dalton Philips, who was sacked in January after failing to improve performance in his five years in charge.