By Mark Kleinman, City Editor
Two brothers hired to boost the efficiency of Marks & Spencer's (M&S) clothing business are in line for multimillion pound paydays which could make them the company's best-paid employees over a three-year period.
Sky News can reveal that Mark and Neal Lindsey, who were recruited just over a year ago, will receive a fixed proportion of the savings generated by the improvement in M&S's gross margin, in addition to basic salaries of £400,000 each.
The retailer said earlier this month that it remained on course to record a gross margin improvement of between 150 and 200 basis points, which analysts say would translate into an increase in profits worth tens of millions of pounds.
Sources said on Friday that the Lindseys had been hired on a three-year contract, with one adding that while their payout for 2014-15 would be substantial, it was likely to be far higher in the subsequent two years.
M&S refused to disclose the brothers' remuneration arrangements to Sky News because they are not on the company's main board.
However, company insiders said that their financial rewards would be aligned with the long-term interests of M&S shareholders, who have been boosted by third-quarter results showing the first improvement in general merchandise sales for more than three-and-a-half years.
One person close to the retailer insisted that the Lindseys would not be the highest-paid M&S employees for 2014-15, but conceded that their bonuses were directly tied to margin improvements in the general merchandise business.
A number of institutional shareholders have told Sky News that while they welcomed greater efficiency within the business, they were keen to understand the potential scale of the rewards that could accrue to them over the duration of their contract.
Unlike at banks and insurance companies, listed businesses in other sectors are not obliged to disclose - even anonymously - the remuneration of their most highly-paid employees.
The two sourcing chiefs were lured out of semi-retirement by M&S after an impressive track record as the architects of rival Next's widely-envied supply chain.
As the Hong Kong-based sourcing directors for general merchandise, the Lindseys have specific responsibility for clothing and footwear, overseeing M&S's network of regional sourcing offices around the world and its large London-based central sourcing team.
Although little-known in the UK, they played an important role in assisting Next's rise to prominence on the high street and its establishment as a darling of the City.
Speaking on 2 April, Marc Bolland, M&S's chief executive, said: "We have made strong progress over the quarter.
"We continued to deliver on General Merchandise gross margin, and are pleased that we have achieved this whilst also improving General Merchandise sales.
"M&S.com has returned to growth, as planned, with further improvement in customer metrics."
M&S shares were trading at just over 574p on Friday afternoon, giving the company a market value of £9.3bn.
The shares are up by 30% over the last 12 months.
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