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Mr Price Group chief executive Alastair McArthur took a 34 percent cut in pay in financial 2008 to earn R6.24 million, even as the company squeezed out 14 percent profit growth in the tough discretionary goods sector.

July 16, 2008 

By Tom Robbins

Cape Town – Mr Price Group chief executive Alastair McArthur took a 34 percent cut in pay in financial 2008 to earn R6.24 million, even as the company squeezed out 14 percent profit growth in the tough discretionary goods sector.

McArthur’s cash performance bonus was cut from R6.03 million to R2.6 million, the annual report says. His basic salary rose 5 percent to R2.71 million.

Analysts say the retailer is resilient in a downturn due to its discount cash model.

The total cost of executive bonuses fell 54 percent to R6.9 million as all executives had their payouts cut.

The annual report notes that headline earnings a share performance is one of the criteria used in determining bonuses. Headline earnings a share grew 14 percent in the year to March, down from 27 percent last year.

Abri du Plessis, the chief investment officer at Gryphon Asset Management, said yesterday that it was “commendable” that bonuses had been cut after a poorer financial performance.

“It was not a good performance, though it may have been good relative to peers,” said Du Plessis, who noted that bonuses had come off a “correct and deserved high base”.

Adding the overtraded furniture category to the Mr Price Home chain at the high point of the cycle had been “over the top and irresponsible. That is why the bonuses were cut.”

McArthur, as chief executive, is primarily responsible for strategy, the annual report says.

In the year to March, clothing profits were up 32 percent to R670 million. Homeware profits fell 31 percent to R118 million.

Mr Price gained 0.13 percent to R15.32 on the JSE yesterday. The general retailers sector lost 1.42 percent.