Next bosses bet on share price
Bosses of fashion chain Next are betting £2.6m(€3.9m) on the business in the hope of netting a windfall five times bigger.
Next said four directors, including chief executive Simon Wolfson and other senior staff, are investing a total of about £1.5m (€2.3m) of their own money in financial wager contracts based on the group’s share price performance over four years.
Three of the directors and the other staff are also investing the £1.1m (€1.7m) net proceeds of a special bonus granted to them by Next into the contracts, which are related to the price of a warrant listed on the London Stock Exchange.
Next said the return on the investment – arranged through an unidentified independent third party – would vary between zero and a maximum of about five times the initial sum, depending on the group’s share price performance during the four years.
A return of zero will be generated if the final share value after four years is £20 (€30) or less, while the maximum will be achieved if the value moves to £24.50 (€37.14) or more at that time.
Today, Next’s share price rose nearly 1% or 14p to 1511p.
Mr Wolfson is investing £500,000 (€758,000) of his own money, while finance director David Keens is injecting £200,000 from his personal funds.
Product director Christos Angelides is also putting in £200,000 (€303,000), while property director Andrew Varley is investing £100,000. Other unidentified senior staff are putting in a total of £480,000 of their own funds.
Mr Keens, Mr Angelides, Mr Varley and the senior employees are also investing their special bonus after tax and National Insurance payments. Mr Wolfson is not taking part in the bonus scheme because the group’s pay committee, which approved the arrangements, consulted him about it.
Next said it was not subsidising, supporting or underwriting the contracts.
A spokesman for the group said Mr Wolfson and his colleagues wanted to put extra incentives in place to drive the share price up and to retain senior staff.
“I think they just wanted to do something a bit different and a bit more than the norm,” he said.
In May, Next defied a difficult trading outlook on the high street to post a 17% rise in retail sales.
Analysts forecast that the group will make pre-tax profits of £395 million for the 12 months to January 31 next year.
Analyst Nick Bubb, of Evolution Beeson Gregory, said: “The curious “investment” by the senior management of Next in a complicated four year geared warrant shows they fancy their chances and aren’t scared of a revived M&S or of a post-election consumer slump.”
