M&S CEO faces multimillion-pound pay hit after cyber attack

M&S CEO Stuart Machin is set to face a significant pay reduction of up to £1.1m following a cyber attack that has severely impacted the retailer’s operations and stock value.

The ongoing cyber attack, which was disclosed on April 22, has driven a 14% drop in M&S’s share price, translating to a loss of approximately £831,000 from Machin’s performance share plan and £233,000 from a deferred bonus, both of which are set to pay out in July.

The attack has led to a series of operational disruptions, including issues with online ordering and in-store stock availability.

The combined hit to Machin’s compensation could reach up to £2.4m, as he is also facing paper losses on shares held through long-term incentive plans.

The cyber attack, which is believed to have compromised both personal and staff data, has left M&S unable to accept online orders for over three weeks.

This disruption has caused significant revenue losses, with analysts estimating that M&S could have lost over £75m in sales so far, and this figure could rise to £125m if online operations are not restored soon.

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“Online sales have suffered greatly,” said Clive Black, retail analyst at Shore Capital told The Financial Times.

“The disruption has cost M&S hundreds of millions in potential sales, and the full impact may not be clear until the next financial year.”

Despite the financial setbacks, M&S remains optimistic about its performance for the year to March 31, as the attack occurred after the company’s financial year ended.

The retailer is expected to report a strong annual profit, but the future of Machin’s pay package may be subject to further scrutiny, depending on the long-term consequences of the cyber attack.

While the company works to restore operations, Machin’s pay will likely reflect M&S’s share price performance, with the retailer stating that his compensation is “always based on the achievement of company objectives and financial performance.”

However, some analysts believe that the ongoing disruptions may slow M&S’s planned transformation, which includes improving back-end operations and enhancing its ecommerce offerings. This could have a more lasting effect on the retailer’s fortunes going forward.

M&S has not only suffered from lost sales but is also grappling with the higher costs of dealing with the cyber attack.

The company has also had to rely on external advisers to help restore its systems, further inflating operational expenses. Although the retailer is set to claim up to £100m from its cyber insurance policy, analysts remain cautious, believing this pay out may not fully cover the extent of the damage.

Kate Calvert, analyst at Investec, noted: “While the management team has focused on managing the immediate fallout, the City will be closely watching the longer-term impact on M&S’s transformation plans.”

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