Logistics firm criticised for paying bonuses while claiming UK furlough support | UK job furlough scheme

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A US-owned delivery and warehousing firm that counts Marks & Spencer and Asos among its clients has come under fire for giving bosses multimillion-pound bonuses while claiming furlough support funded by UK taxpayers.

XPO Logistics paid $6.4m (£4.6m) in cash bonuses for 2020, including $3.3m to Brad Jacobs, the Connecticut-based company’s chief executive and chairman, according to its annual report.

The firm’s top three executives also received share options worth more than $27m, and a new incentive scheme could result in them splitting a further $144m over six years.

Data from HM Revenue and Customs shows that six of the company’s UK subsidiaries claimed a total of between £12m and £25m in furlough support between December 2020 and February, the only months for which data is available.

XPO did not own two of the businesses until January 2021 but the claims continued after that point.

The company’s annual report says its pay committee met 11 times during 2020 to discuss executive compensation and had the power to “incorporate an element of discretion” in its decisions.

Pirc, an organisation that advises shareholders on how to vote at firms’ annual meetings, said investors should oppose the company’s pay policy and the reelection of its pay committee at a vote in the US this Tuesday.

Pirc highlighted the generosity of the firm’s pay arrangements in the light of its decision to take state support.

“It is expected for companies relying on taxpayer support during the pandemic to make appropriate reductions in executive remuneration,” Pirc said.

Shareholder votes on pay are not binding in the US but can prove embarrassing for companies that face a significant rebellion.

XPO Logistics made no reference in its annual report to reining in executive compensation in 2021 to reflect its use of state support during the pandemic.

However, the company said it had discussed its 2020 executive pay with shareholders throughout 2020 and into early 2021, while claiming furlough.

The Labour MP Olivia Blake, who sits on the public accounts committee, which monitors public spending, said: “When companies are taking large chunks of public money, questions have to be asked about why big bonuses seem to be paid.

“Clearly, the intention of the furlough scheme is to protect jobs, and it seems strange that companies would be paying out millions in bonuses.”

XPO employs more than 25,000 people in the UK and holds contracts to deliver and store goods with firms including Marks & Spencer, Asos, Primark and Waitrose.

The UK was the firm’s largest market outside the US at the end of 2020, accounting for more than $2bn of its $16bn annual revenue.

It has since acquired two businesses from rival Kuehne and Nagel, in a purchase that was agreed in March 2020 but was not completed until January 2021.

A spokesperson for XPO declined to comment.

A Treasury spokesperson said: “Over the last 12 months, the furlough scheme has helped pay the wages of millions of workers across the UK – and it would be wrong to deny anyone necessary support during this difficult time.

“We’ve been clear the scheme should be used in the spirit in which it was intended.”

Hafta Ichi
Source: The Guardian
Keyword: Logistics firm criticised for paying bonuses while claiming UK furlough support | UK job furlough scheme

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