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Marks and Spencer bosses hit a pay package of up to £1.06 million after a sustained cyber attack defeats British retailer stocks for more than 10 minutes.
The Stuart Machine, appointed chief executive in 2022, is expected to lose around £831,000 on the Performance Share Plan and £233,000 on the postponed bonus awarded in the same year. Both have been affected by a 14% drop in M&S stock prices since revealing the hacking incident on April 22nd.
At the end of trading in London on Friday, the stock price reduced the award to £5.066 billion and £1.422 billion, respectively.
Machin also has a nursing paper loss of about £1.4 million from the remaining shares held under the long-term incentive plan and through postponement bonuses, which could potentially bring the total potential hit so far to around £2.4 million.
The FTSE 100 Group said Tuesday that some private customer data was stolen as part of a cyberattack, which failed to accept online orders for three weeks, leading to empty shelves at some stores.
Salaries for the fiscal year from March 31 to March 31 should not be hit with a cyber attack as the company’s fiscal year is expected to end and retailers will post strong annual results.
However, two senior compensation advisors say board members can exercise their discretion to reduce bonuses in light of cyberattacks. They added that this year’s bonuses and long-term results will likely be a hit after a challenging first quarter for M&S.
“The compensation committee should probably preempt fallout by signalling their discretion,” said Thomas Bolger, a senior stewardship analyst at Minerva Manifest, who advises shareholders.
“Next year there is a high chance that an announcement will be made reporting on the fiscal year in which the cybersecurity attack took place,” he added.
M&S said the machine’s compensation is “always based on the company’s goals and financial performance achievement,” and said “a large portion of profit is long-term and its value always reflects the stock price.”
Those close to the executive say he wasn’t driven by his pay package, and his focus was to revive the retailer’s fortunes.
However, the recent weeks of confusion have threatened to disrupt his planned turns.
The company reported full year results on Wednesday and plans to update the market for the hack results.
Analysts predict that pre-tax profits rose 17% to £840m from March 31. But “it was probably a strong start to the year (this year) and will definitely be covered by cyberattacks on Easter,” says Investec’s Kate Calvert.
According to data from Nielseniq, M&S sales rose 14.7% year-on-year over the 12 weeks from 12 weeks to April 19th.
“We’ve seen a lot of effort into making it a great deal,” said Clive Black, retail analyst at Shore Capital. “What’s clear to us is that this will have a serious impact on first quarter performance (multiple millions of pounds), and by definition it will have a significant impact on the full year outcome of 2026.”
Based on an extrapolation of average online sales per day, M&S may have lost more than £755 million in revenue to date, and if online operations don’t resume by the end of the month, the loss could rise to around £125 million, analysts said.
Also, attacks on the system caused M&S to have trouble keeping shelves in stock at some grocery stores. Black people estimate that if availability is reduced by about 10%, they will lose around £15 million in sales per week.
“There are people who haven’t gone to M&S because they think availability isn’t there,” he added. “The glorious weather of the past seven weeks means that M&S is extremely frustrating about last month.”
Beyond sales losses, labor costs could have also skyrocketed as some systems were turned off and retailers needed to draft advisors to help restore their businesses.
M&S was able to claim losses of up to £100 million from cyber insurers, and while Financial Times reported this week, this week, bringing some relief, some analysts don’t expect this to alleviate pain.
Calvert said the city will be keen to understand the impact of the business on wider changes next week, while the management team is focused on keeping the business running.
Analysts at Morgan Stanley reiterated these views, saying in a memo this week, “The biggest risk is when we slow the pace of M&S’ medium-term conversions.”
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An important part of the next phase of M&S turnaround is based on improving backend operations such as automation across its distribution centers and better shopping apps, including the range and stores, stores, and stores that have successfully modernized the retired sites that are not advantageous, followed by the ability to improve backend operations such as automation across its distribution centers and better shopping apps.
Shore Capital’s Black said:
Nevertheless, he believes that M&S’ performance in the 2024-2025 fiscal year should be a benchmark for future outcomes, not this year, which was ravaged by transactions with cybercriminals.
“They had a very impressive year, gaining market share in food and clothing before the attack.
