Despite financial setbacks, Asos justifies a notable pay rise for its CEO, emphasizing improved underlying profitability.
- José Antonio Ramos Calamonte’s pay rose by 44% to £1.17m, despite Asos reporting an operating loss of £331.9m.
- The company attributes the pay rise to enhanced profitability under difficult market conditions.
- Industry voices question the timing of substantial executive pay amidst widespread profit issues in the sector.
- Other fashion companies have opted to waive bonuses due to underperformance, contrasting with Asos’s actions.
José Antonio Ramos Calamonte received a total compensation of £1.17 million for the year ending 1 September 2024, representing an increase from the previous year’s £814,858, as detailed in Asos’s latest annual report. This package comprised an annual salary of £716,436 and bonus payments amounting to £376,801, including an annual bonus specifically of £361,585.
Despite Asos experiencing an 18% decline in full-year revenue to £2.9bn, leading to operating losses escalating to £331.9 million, the company justifies the CEO’s pay rise. The financial downturn was ascribed to reduced consumer spending and challenging competition from less costly fast fashion retailers and online resale platforms. Additionally, the loss before tax was registered at £379.3 million, up from the previous year’s £296.7 million.
An Asos representative communicated that all salary and bonus decisions undergo board approval, aligning with industry standards and linked to meeting strategic targets. The spokesperson highlighted advances made during the past year towards transforming the business. While the retail climate has been difficult, Asos claims improvements in product positioning have substantially boosted profitability.
The retailer reported an adjusted EBITDA of £80.1 million, reflecting a 44% decline year-on-year, but underlined a significant enhancement in free cash flow, reaching £37.7 million, a stark £250.7 million improvement from 2023. Contrary to Asos’s approach in rewarding executive leadership amidst financial loss, other retailers like Dr Martens and Burberry, have forgone leadership bonuses due to lacklustre profits. Similarly, Boohoo Group also cancelled executive bonuses following shareholder objections.
In a broader industry context, actions by Asos are contrasted by moves such as Crew Clothing’s legal action against a former CEO over an excessive bonus. Criticism arises regarding the strategic decisions by Asos leaders, especially as various fashion companies reassess executive remuneration in correlation with performance results.
Asos’s decision to increase the CEO’s pay despite financial challenges raises questions about executive compensation amidst industry struggles.