Struggling Ted Baker Battles Investors Over Plans to Boost Executive Pay

Ted Baker’s plan to increase executive base pay and bonuses appears to have drawn the ire of some investors.

As reported by the Sunday Times, Institutional Shareholder Services Inc. has recommended that investors vote down the retailer’s remuneration policy at its annual general meeting on July 21. As Ted Baker continues to face struggles, ISS says that the executive pay boost is not justified.

In a statement provided to FN, Ted Baker said its remuneration policy is meant to “align executive director remuneration with the value generated for shareholders.”

“The performance metrics used to determine remuneration levels are also strongly linked to business performance over the short and the longer term, ensuring management are incentivized to achieve the objectives of the transformation strategy to return Ted Baker to growth,” the company stated.

Already flailing amid changing consumer preferences, digital disruption and C-suite shakeups, the British fashion retailer has faced further challenges stemming from the coronavirus pandemic. For the fiscal year ended Jan. 25, Ted Baker posted a 92.4% year-over-year fall in underlying pre-tax profits to 4.8 million pounds, or $5.96 million. From late January through the start of May, the company saw revenues fall 26%, with total retail sales — including e-commerce — down 34% as a result of widespread store closures.

To help bolster its balance sheet, Ted Baker last month revealed that it had shored up 105 million pounds (approximately $130.47 million) in new equity. The company has also announced plans to invest more of its resources in digital as part of a new three-year transformation plan unveiled by new CEO Rachel Osborne. The retailer said in June that its online sales had surged 78% year over year since March 22, the day before the United Kingdom implemented lockdowns.

Over the past year and a half, the Ted Baker C-suite has seen significant turnover — including at the CEO spot. Founder and part owner Ray Kelvin resigned in March 2019 amid allegations of misconduct and inappropriate physical contact with staff (he denied these claims). Then, successor Lindsay Page abruptly resigned in December after an inventory accounting error on the company’s balance sheet was revealed. Following an independent review by Deloitte, the company confirmed that it had overstated the value of inventory by 58 million pounds as of a Jan. 26, 2019 report — more than double the amount it had initially anticipated. Current chief Osborne was promoted to CEO from chief financial officer in March. A month later, Ted Baker appointed a new chairman, Next alum John Barton.

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