Shares in major retailer, Woolworths hit and closed at an all-time high of $39.68 yesterday after CEO Brad Banducci and chairman Gordon Cairns announced they would have their pay packets docked for the 2019-20 financial year in response to the company’s $300 million underpayments of many of its managers.
The supermarket giant announced that Mr. Banducci would forgo his target short-term bonuses for the current financial year, a mixture of cash and vested shares totalling $2.6 million.
Mr. Cairns will reduce his fee by 20%. Having earned $670,000 in directors fees for the 2018-19 financial year, that could see him take home as much as $134,000 less this year.
Woolworths revealed in late October that it had underpaid nearly 6,000 of its salaried employees as much as $300 million over a 10-year period, due to inconsistencies between the company’s enterprise industrial agreement and the general retail award.
That announcement saw Woolworths join the ranks of other high-profile retailers found to have underpaid their staff, such as 7-Eleven and Super Retail Group. But the quantum was much larger than those or other examples.
The news saw the shares touch an all-time in intraday trading day high of $39.745 and close at the all-time high of $39.68, up to $1.27%.
That rise added $600 million to the value of Woolies shares in a market that jumped 0.9% on hopes that the Reserve Bank will relax monetary policy next year.
“As a group, we have let many of our salaried team members down. And our priority right now is to ensure that they receive the money they are owed as quickly as possible,” Banducci and Cairns said in a joint statement lodged with the ASX yesterday.
The company says intends to finalise its review of the underpayment scandal by the end of the 2019-20 financial year, with further updates to come at its half-year result in February.
Mr. Banducci’s $2.6 million worth of short-term incentives had not yet been granted to him as they were bonuses reliant on the company hitting various financial and customer satisfaction targets.
He won’t go home poor though this financial year – the Woolies CEO will still pocket $5 million in vested long-term incentives awarded to him in 2017, along with a fixed salary of around $2.6 million.