How many millions does it take to run a major supermarket chain like Coles? Quite a few if you are Steve Cain and it is your second go at senior management at Coles in 14 years.
The documentation for Coles’ spin-off from Wesfarmers reveals that the new CEO, Steve Cain, will be paid a $3.9 million signing on bonus in addition to his base salary of $2.1 million and up to $3.5 million in other bonuses — in recognition of payments he lost when he jumped ship from smaller rival, Metcash, earlier this year.
This will be Cain’s second time at Coles. He left his position of MD in 2004, removed by the CEO after his plans for revamping the retailer ran into problems. His new role is much larger and includes Coles online, hotels, Coles Express, financial services, and Coles’ stake in flybuys. In his earlier stint, Cain was the second-highest paid executive after then-Group CEO, John Fletcher (earning $3 million in salary and bonuses). Coles Myer (for Myer was a part of the company back in 2004) paid Cain $2.1 million in departure “tax” which is what his base salary will be this time round.
So how difficult will Cain’s job be at Coles and how will his pay compare to his rival at Woolworths? Coles had 112,000 staff and sales of just over $39 billion at the end of last June, which puts it well behind the more than $56 billion for rival Woolies. Woolies had 201,000 employees and had higher sales because, while it owns the faltering Big W discount department store chain, it has bigger supermarkets and liquor sales. Wesfarmers has retained Target and K-mart chains — the latter the best performing retailer in the country for the past five years.
By the end of this December, Cain’s pay for 2018-19 will have been boosted to at least $4.5 million — his $2.1 million base pay, the first $900,000 of his $3.9 million bonus by the end of next month and a further $1.5 million by the end of December and the final $1.5 million to be paid at the end of December 2019. To run all of Woolies, CEO Brad Banducci was paid just over $3.86 million in 2017-18, which was lower than the $4.02 million the year before.
Cain will be the third British supermarket veteran to run Coles since the Wesfarmers takeover in 2007 — the first was Ian McLeod, then John Durkan. McLeod and Durkan were mentored by Archie Norman, perhaps the best retailer Britain has seen for years.
Norman was imported to prepare the turnaround plan for Coles and has remained a consultant, even though he headed up the UK Conservative Party, chaired commercial TV group ITV and from 2017, took the chair off Britian’s biggest department store group, Marks and Spencer. His big role was turning Asda into one of Britain’s best performing supermarkets chains, which weakened after he left. Both McLeod and Cain worked for him at Asda.
Buried in the Coles spin-off documents was a single paragraph:
Archie Norman has been engaged to provide strategic advice to the Coles board. Mr Norman was previously deputy chair of Coles and will continue his strategic contribution to the business in an advisory role. Mr Norman’s ongoing advisory role with Coles will further support the ongoing leadership transition and the development of Coles as an independent listed company.
And what did Cain do when he left Metcash ahead of joining Coles? He went on a study tour of supermarkets overseas with Archie Norman. Perhaps Coles/Wesfarmers should have revealed how much Norman is being paid to continue to babysit the Coles CEO?
A previous version of this article stated Cain was a CEO of Coles and was removed by the board. His previous role was in fact MD of Coles Supermarkets and he was removed by the CEO not the board.