Why The M&S CEO Earned £7.1m After Cyber Disaster 

Stuart Machin, the boss of retailer Marks & Spencer, has bagged a £7.1m pay packet as he turns into the newest CEO to take pleasure in a considerable pay rise.

Machin’s pay was up by 39% for the final monetary yr. The bump in earnings got here weeks earlier than M&S fell sufferer to a cyberattack over Easter, which halted on-line orders and compromised buyer information.

Compared, the retailer’s earlier chief, Steve Rowe earned a complete of £2.6m in his final yr on the helm.

It could appear shocking for the boss to take residence such a large enhance whereas disaster comms are nonetheless ongoing. However Machin has been praised for his dealing with of the state of affairs. His newest pay reward highlights the vital position that leaders play in enterprise continuity planning.

M&S CEO’s pay packet, defined

Deciding how a lot to pay your self as an employer could be a troublesome job. Not like worker salaries and wages, CEO pay virtually wholly displays the efficiency of the enterprise. 

Alongside a base wage of £894,000, Machin (who grew to become CEO in 2022) reportedly earned £1.6m in bonuses linked to M&S’ efficiency within the final yr, and £4.6m in long-term bonuses based mostly on future efficiency, which he’ll be capable of entry in two years.

CEO pay has been rising steadily over the previous twenty years. Machin’s payday jackpot will appear astronomical to the common UK employee, who at present earns round £40k a yr. 

That mentioned, it’s removed from the biggest within the FTSE 100. Final yr, the boss of HSBC made headlines when he was awarded a 600% bonus regardless of company-wide cost-cutting.

Why M&S gave its CEO a pay rise amid a cyber disaster

Ransomware group DragonForce claimed duty for the current M&S hack. Massive retailers Harrods and Co-op had been additionally hit, forcing each to close down elements of their IT programs. The fallout for all three victims will seemingly proceed for a number of months. 

In consequence, it could appear an odd time to boost the boss’ pay. On the one hand, Machin’s pay deal was confirmed weeks earlier than the assault happened.

However the chief govt can also be set to obtain a 2% pay rise from July (simply in need of the 5% pay rise that M&S employees obtained in the beginning of April) taking his annual wage to £865,700.

So what’s behind the choice to reward your chief whereas the enterprise is in disaster?

In reply, take a look at Marks & Spencer’s buying and selling historical past. Machin has overseen an spectacular monetary turnaround for the agency, which had been flailing. Below his tenure, the agency’s share worth climbed from 127p in January ‘23 to a formidable 224p by August.

Sensible advertising and marketing efforts have additionally seen the 120-year-old retailer pivot from a ‘Granny-ish’ popularity to draw youthful Gen Z customers, boosting its market share and income. On Monday, M&S confirmed that group income earlier than EBITDA had grown by 22% in FY24-25.

In its annual report, it additionally mentioned that it’s going to delay setting efficiency targets for its 2025 pay awards till the tip of the yr, “on account of the current cyber incident.”

The choice seems to recognise the extraordinary nature of the most recent cyber incident, and the work that Machin has accomplished to mitigate its impression on the enterprise behind-the-scenes.

Management classes

It’s all properly and good being a robust, profitable chief throughout an organization’s heyday. It’s far more durable to do it when the going will get powerful.

Machin’s response to the M&S cybersecurity disaster has earned him excessive reward. He has ensured common communications to clients and buyers.

The ICAEW additionally studies that below Machin’s management, M&S had run a cyberattack simulation final yr, demonstrating the significance of contingency planning.

Machin says the check run meant the enterprise knew reply “rapidly and take the appropriate actions instantly” with the intention to “put the enterprise continuity plan into motion”.

In distinction, CrowdStrike CEO George Kurtz confronted criticism for an announcement that, in line with critics, prevented taking duty and failed to incorporate an apology — after a defective safety replace from the corporate crashed 8.5 million Home windows units final yr.

We’d count on CEOs to be rewarded for a clean yr of regular, uninterrupted development. However actually, true management is usually revealed in instances of turmoil.

CEOs who steer by crises with resilience, foresight, and accountability are rewarded not only for their successes, however for his or her capacity to safeguard the enterprise when it issues.

Learn our information to designing an efficient enterprise continuity plan for extra tips about hope for the perfect, however put together for the worst.