Next chief executive Lord Wolfson's bonus halved last year as retailer fails to meet top earnings target

 
Kasmira Jefford
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Next's profit growth slowed last year, resulting in a lower bonus for directors

Next chief executive Lord Wolfson's bonus fell to half the amount received the previous year after the retailer failed to meet its top earnings target.

The Tory peer, who has been at the helm of the company for the past 15 years, was paid £4.76m in cash and shares last year, including a £503,000 bonus.

Although that was still higher than the £4.66m he received the year before, which included a £1.1m bonus that he gave to staff for the third year in a row, Next's annual report released today shows.

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To meet its bonus performance targets, Next had to deliver pre-tax earnings per share (EPS) growth of five per cent last year, once adjusted for special dividends and excluding exceptional gains.

Lord Wolfson could earn a maximum bonus of 150 per cent of salary if pre-tax EPS growth was higher than 15 per cent (607p).

Growth achieved last year was 8.1 per cent, meaning Lord Wolfson was eligible for a bonus of 45 per cent of the maximum, representing 67 per cent of his salary – or £503,000.

In 2015, Next exceeded the 15 per cent target, earning Lord Wolfson and other executive directors the full bonus amount.

Speaking at the company's full-year results last month, Wolfson gave a bleak outlook for the sector, warning that 2016 could be its toughest year since 2008 as the economic environment and the outlook for consumer spending worsened.

The company, which has been one of the most successful clothing retailers of the last decade and is seen as a bellwether for the industry, posted a five per cent rise in pre-tax profits to £821.3m, which was in line with guidance.

However it was less than half the 12.5 per cent pre-tax profit growth recorded the previous year and the company also cut its forecast for 2016/17, saying it could fall by 4.5 per cent in its worst case scenario, which shares tumbling.

Wolfson's salary will rise by two per cent from £751,000 to £766,000 this financial year, however the company's bonus performance targets have not been disclosed.

Next wasn't immediately available for comment.

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