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Highlights
- Frasers Group Plc, owner of famous brands like Sports Direct and House of Fraser has proposed a bonus of £100 million for the new incoming CEO Michael Murray.
- Incoming CEO Michael Murray will get the bonus if Frasers Group Plc share price stays above £15 for 30 trading days in a row on or before 7 October 2025
Frasers Group Plc (LON: FRAS), owner of famous brands like Sports Direct and House of Fraser, has proposed new bonus plans and remuneration package for its incoming CEO Michael Murray. As per the proposed remuneration plan, Mr. Murray will be awarded shares with a value equivalent to £100 million before tax if Frasers Group Plc share price stays above £15 for 30 trading days in a row on or before 7 October 2025, over double of the current price of GBX 667.00 (£6.7) as of 11:05 BST on 27 August 2021.
Mr Murray, who is head of the elevation at Frasers Group, is set to assume the role of the chief executive officer at Frasers Group Plc in May 2022 once its current chief executive Mike Ashley, founder of Sports Direct, steps down from the role. Mr. Ashley who currently owns a 64% stake in the group, will continue to remain on the board of directors of the company as an executive director.
The Remuneration Committee has also recommended an annual salary of £1 million per year for Mr Murray. He currently oversees the transformation of retail stores business and has been working for several years with the Frasers Group. The proposed resolution of remuneration and bonus scheme will be put forward to voting at the annual shareholder meeting on 29 September 2021.
Stock price performance
The company’s stock got listed on the London Stock Exchange in 2007 at around 300p and later reached a high of 924p per share in 2014, which is a lifetime high for the stock. However, during the Covid-19 pandemic, the share price declined to 175p as investors feared lockdown could impact the company’s business.
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Frasers Group Plc current market cap stands at £3,361.12 million as of 27 August 2021. In the last one year, the stock has given a 91.35% return to shareholders.
What the retail investors should be doing?
The proposed bonus of £100 million to the new CEO if Frasers Group Plc share price reaches GBX 1500, if achieved could deliver over 100% return to investors from the current stock price.
The company has been reporting higher sales numbers over the last five years excluding the pandemic period, which resulted in revenue decline as most of its shops were closed due to lockdown. Still, the total group revenue was at £3,625.3 million with a reported EBITDA of £536.5 million during the 52 weeks ended 25 April 2021. Moreover, the company was able to reduce its net debt to £248.9 million from £366 million in the prior period.
The company continue to invest in retail shops and online channels and has a positive outlook going forward.
Though the company’s remuneration committee has said that it was mindful while setting targets and considers it achievable, its good that the CEO’s compensation has been linked with shareholder value. It will not only assure a better management but will also ensure participation and efforts oriented towards growth of the company.
