Asos has announced a significant pay rise for CEO José Antonio Ramos Calamonte, attributing it to enhanced profitability under his leadership, even as the company faced substantial losses.
- The CEO’s total remuneration increased by 44% to £1.17 million, despite Asos reporting operating losses of £331.9 million in the past financial year.
- Asos’s annual report reveals a reduction in full-year revenue by 18% to £2.9 billion, impacted by competitive market conditions and reduced consumer demand.
- An Asos representative stated that employee remuneration adheres to industry benchmarks and aligns with strategically important goals, despite tough market conditions.
- The decision to award a pay rise stands in contrast to recent trends of companies waiving executive bonuses amid financial underperformance.
Asos has justified a substantial pay increase for its CEO, José Antonio Ramos Calamonte, despite the company battling significant financial setbacks. The online fashion retailer has attributed this decision to what it describes as improved profitability under Calamonte’s leadership. The CEO’s total pay package for the year ending 1 September 2024 rose by 44% to £1.17 million, encompassing an annual salary of £716,436 and bonus payments amounting to £376,801, largely due to an annual bonus of £361,585.
In detailing their financial performance, Asos’s recently published annual report outlines a concerning 18% decrease in full-year revenue, dropping to £2.9 billion. This decrease is primarily ascribed to a dip in consumer demand alongside intense competition from more budget-friendly fast fashion retailers and online resale platforms. As a result, the company faced operating losses escalating to £331.9 million. Furthermore, their loss before tax reached £379.3 million, a notable increase from £296.7 million in the previous fiscal year.
Despite these financial challenges, an Asos spokesperson has asserted that all employee remunerations, including bonuses, are sanctioned by the board based on standard industry benchmarks and the achievement of critical strategic objectives. They highlighted that Asos has made significant strides in transforming its business in the past year, with a strengthened product positioning and foundational profitability improvements, culminating in a positive adjusted EBITDA of £80.1 million and an impressive improvement in free cash flow of £37.7 million from the previous year.
This decision to enhance the CEO’s remuneration starkly contrasts with the recent actions of other retailers like Dr Martens and Burberry, who have decided against providing bonuses to their leadership in light of underwhelming profits. The Boohoo Group has similarly withdrawn executive bonuses following shareholder dissatisfaction.
In light of such developments, the debate over whether underperforming brands should cease executive bonuses has gained traction, especially following the British casual-wear retailer Crew Clothing’s legal action against its former CEO over a £600,000 bonus.
Asos’s decision underscores the complexities of executive remuneration in a challenging retail landscape.
