Woolworths CEO Roy Bagattini, an outspoken proponent of a “living wage” for store employees, earned R122.4m in the 2023 financial year, more than three times what he earned in the previous year, as his long-term share options vested.
Woolworths released its annual report late on Friday, including a section on executive remuneration and how it is calculated.
Bagattini earned R90.6m for work in SA and was paid AUD$2.6m (R31.8m) as he spent some time in Australia, where the group’s clothing chain Country Road is located.
Bagattini’s remuneration included base pay equal to R20.4m, short-term annual incentives of R28m, long-term share options awarded three-years ago that amounted to R66.7m and R7.1m in share dividends.
The annual report reads: “The increase in Bagattini’s total disclosed single-figure remuneration reflects the combination of increased variable pay after the group’s outperformance in the 2023 financial year, 100% of his short-term bonus, and includes 100% of long-term shares allocated in 2020.”
To meet the targets to earn his long-term bonus, Woolworths had to record an improvement in adjusted headline earnings per share, return on capital employed and a reduction in the group’s debt levels. Bagattini also had to improve the online shopping service in SA and Australia.
The headline earnings per share price may have risen in part due to Woolworths management’s decision to buy back R2.9bn shares in the past year. Investing in a company can lift the share price and increases the headline earnings per share as fewer shares are in circulation.
Bagattini’s success also includes improving the group’s fashion business, selling David Jones in Australia after bringing back the first-yet profits from it and improving the group’s balance sheet.
The SA clothing and home business, which had been struggling, is doing better and selling fewer clothes on promotion, having cut ranges, reduced its overproliferation of formal women’s wear and instead focused on top-selling categories that include children’ clothing, underwear and denim. The food business however, sold slightly smaller volumes in 2023 and is facing increased competition from Checkers.
Social inequality
In the Woolworths results presentation in August last year, Bagattini spoke about the importance of a living wage and inequality.
“I don’t think we spend enough time talking about the social component of ESG ([environmental, social and governance], which is just as important particularly in the context of a country like ours, with the challenges we face in terms of social inequality.”
He said Woolworths paid 60% above the minimum wage and 25% above the retail sector.
In 2022, Woolworths allocated R120m over three years to lift minimum wages. The retailer also announced last year that it would increase its minimum wage from about R33.40 an hour in 2022 to R41.25 for 2023.
Woolworths was the first retailer to disclose the hourly wage of R41.25 in the interests of transparency. It is a figure that Pick n Pay does not yet reveal.
If the lowest-paid worker takes home a minimum R41.25 an hour and works eight hours a day at an average 22 days a month, they would earn R7,260 a month or R87,120 a year.
While workers do not have the same skills or responsibilities as an executive, the CEO earned more than 1,400 times the lowest-paid worker in 2023.
Woolworths COO Sam Ngumeni earned just under R100m for the year, as he took home R71m in long-term share awards.
By contrast, for its 2023 financial year, Pick n Pay CEO Pieter Boone earned R24.6m. In its 2022 financial year, Shoprite group CEO Pieter Engelbrecht earned R63.4m, which included long-term share options.
This is not the first time a Woolworths CEO has earned a pay package that outstrips peers. Former CEO Ian Moir left in 2020 with a R77m package including a R35m restraint of trade payout despite the value destruction caused by the failed purchase of Australian department store David Jones in 2015. The payout caused consternation among shareholders.
Under Moir, Woolworths paid R21.5bn for David Jones, which lost money year after year. It was sold this year for R1.1bn. It only brought back about R3.6bn to SA, losing more than R16bn of the investment.
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