RICHARD BAKER, the chief executive of Boots, could earn more than £3 million in three years’ time under a new pay and incentive package, designed to link rewards more closely with performance.
The proposals will be put to a shareholder vote at the retailer’s annual meeting on July 21.
The proposals were detailed in the group’s annual report, showing that Mr Baker received no bonus this year after profits fell 11 per cent.
However, he still received £1.024 million — £644,000 in salary and fees and £380,000 benefits. The figure was slightly below the £1.086 million he received the year before.
Benefits included £200,000 in compensation for the loss of his part-vested Asda share options and £151,000 in relocation expenses.
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In terms of a proposed performance share plan, Mr Baker could earn a maximum of 250 per cent of basic salary plus any growth in the value of the shares over the life of the scheme. Other executive directors could earn up to 200 per cent of basic salary, plus share price growth.
The awards will not pay out unless the share returns exceed the UK retail index by at least 2 per cent a year, over three years. To achieve the maximum payout, shareholder returns must exceed the index by at least 10 per cent a year.
A spokesman for Boots said investors had been consulted. He said: “The new scheme does offer better rewards for better performance.
“But what it takes away is above-average rewards for below-average performance. Executives will only be better rewarded if their performance merits it.”