Dixons Carphone top brass take 20% pay cut as swathes of Brit workforce furloughed
- Reference: 1586348104
- News link: https://www.theregister.co.uk/2020/04/08/dixons_carphone_exec_coronavirus_pay_cut/
- Source link:
"This is a uniquely challenging situation which means that we need to take extraordinary (and temporary) measures now to secure our future," Baldock wrote in an email to staff last week, seen by The Register .
These are strange times: UK prime minister Boris Johnson, now in intensive care with COVID-19, [1]ordered Brits to stay indoors for three weeks from late on 23 March and ordered all shops deemed non-essential to shut. The expectation is that the lockdown will be extended for another three weeks, maybe longer.
"The first and immediate action," Baldock continued, "is that ExCo colleagues, I, and the Board will take an immediate pay reduction of 20 per cent. In addition, leaders at Grades 6 and 7 will also be asked to take a pay reduction of 10 per cent."
In the year to April 2019, Baldock was paid a yearly salary of £850,000.
He asked "all store colleagues, including store managers" who joined the business before 28 February "who are not working because stores are temporarily closed, to go on temporary authorised paid leave, known as furlough, until our stores are ready to reopen."
Staff operating at corporate HQ will also be furloughed, he added.
Under the [2]Coronavirus Job Retention Scheme , UK employers will be allowed to claim for up to 80 per cent of a furloughed staff's salary, up to £2,500 per month, as well as Employer NI contributions.
Dixons is not the only business leaning on the government for support but has more justification than some… we're looking at you Premier League football clubs Spurs, Norwich City, Newcastle United and AFC Bournemouth. And today The Times reported that Tesco is paying shareholders £900m in dividends while enjoying £585m from the government’s business rates relief holiday.
One part of the Dixons Group that won't be furloughed – because they don't meet the criteria – is the 1,100 Carphone Warehouse staff who were hoping their redundancy could be deferred.
Baldock said the closure of [3]531 standalone Carphone Warehouse stores is permanent, "not temporarily because of the coronavirus," and that affected staff will be paid until 24 April and receive "enhanced redundancy terms."
Addressing the troops with some very sobering words, the chief exec said:
These changes are as fair and proportionate as we can make them and are essential to securing our future. They're also temporary, and we look forward to the end of the crisis that makes them necessary. But nobody knows how long this crisis will last. For now, we'll review these measures every four weeks, but we all need to understand that the crisis may mean they stay in place for longer than that.
Here's hoping he is wrong.
Baldock joins a growing list of biz leaders who are slicing their salaries as they furlough staff, though some are going far further than the Dixons man. Computacenter told the City [4]late on Monday 6 April that CEO Mike Norris has dropped his pay to zero for three months until the end of June. His base salary was £551,000 in 2019. Computacenter is furloughing (or partially furloughing in the case of mainland Europe) around 1,000 of its 15,000-strong workforce. Capita CEO John Lewis has agreed to [5]shrink his wages by 25 per cent for six months .
Updated at 14.04BST on 8 Aprl to add:
Following publication of this article, Dixons made contact with the following statement:
“While this Coronavirus crisis lasts, we are focussed on our big three priorities: Keeping our colleagues safe, helping our customers and securing our future. We are keeping our colleagues front and centre in everything we do, and with the Government’s help, we will look after colleagues financially.
“In this unique and challenging situation, we need to take extraordinary temporary measures now. With immediate effect, all Executive and Board members will take a 20% pay reduction and senior leaders a 10% pay reduction. We will also be furloughing our store, HQ and supply chain colleagues who are temporarily not working due to Covid-19.
“We thank those colleagues in our Supply Chain operations and Contact Centres who are still performing vital roles in our Online business supporting our customers at this critical time, helping them stay connected, healthy and entertained through technology.” ®
Sponsored: [6]Choosing A Low-Code Vendor
[1] https://www.theregister.co.uk/2020/03/23/uk_coronavirus_lockdown_measures/
[2] https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
[3] https://www.theregister.co.uk/2020/03/17/carphone_warehouse_closes_all_541_stores/
[4] https://www.investegate.co.uk/computacenter/ccc/director-remuneration/202004061745029686I/
[5] https://www.theregister.co.uk/2020/03/24/capita_ceo_and_cfo_take/
[6] https://go.theregister.co.uk/tl/1936/-8579/choosing-a-low-code-vendor?td=wptl1936
Re: The Wetherspoons Troughing Method
Don't forget to announce you are taking a 25% pay cut and remember to leave out that you just took 20% options in shares.
Taking a payment in stock options instead a salary isn't an entirely unreasonable approach, options like that only pay out if you stay and the share price goes up. If the company doesn't survive the crisis, or if you bail out, then you get nothing, but if it weathers the storm & returns to profitability those options will be valuable.That's why they are used as bonuses, as a way to persuade senior employees not to leave, and to commit to making things work.
I would be more impressed ...
if he paid himself the furlough maximum of £2,500 per month. 80% of his annual £850,000 is £56,666 per month - about 22 times the furlough maximum.
Re: I would be more impressed ...
Hey, give him a break. The Bugatti needs a service and the swimming pool needs to be kept heated you know.
What is this furloughing?
Isn't it just (unpaid) leave?
Re: What is this furloughing?
Maybe you should have looked at the news at some point in the last month
Re: What is this furloughing?
After the useful comment from the ever so friendly AC furloughing generally is unpaid leave, whilst still remaining technically employed by a company, and not doing any work for that company.
In this case it is a little different as if an employee is furloughed they are not allowed to do any work, and will receive 80% of their normal annual pay (not including extras like overtime as far as I know) which the employer claims back from the government - this payment being restricted to a maximum of £2,500 per month.
The idea is that when the lock down is lifted and businesses can get back to work they have the staff still in place and in the meantime haven't gone bust due to the cost of wages, operating cost (to a greater or lesser extent) etc.
Re: What is this furloughing?
True, but the poster would have to have been blind and deaf not to have heard anything on the radio, online, in print media, and on the daily announcements from the government.
...does he know about Covid-19 yet? Or do we have to explain that too?
Tesco is paying shareholders £900m in dividends while enjoying £585m from the government
Well, then I expect them to deliver £585m in shares to the government by the end of the week, in lieu of a refund of the cash they were given. The government cash is meant to keep the business from going bust so that it can survive and participate in the normal risk / reward sector of the economy again afterwards. It's not a free reward for shareholders because the risk materialised. Behaviour like this is also not going to be looked upon well by the public if the damage causes mass hardship and executive snouts stay in the trough.
The Wetherspoons Troughing Method
Just keep paying those share dividends. Don't worry about your staff - the poor bloody taxpayer will cover them.
PS: Don't forget to announce you are taking a 25% pay cut and remember to leave out that you just took 20% options in shares.