Diageo chief faces £20m pay package amid workforce reductions

Sir Dave Lewis, the chief executive of Diageo, stands to receive remuneration of up to £20m for the financial year ending in June 2027, according to the company’s annual report. This potential payout coincides with a significant reduction in the drinks giant’s workforce, where approximately 2,000 positions have been eliminated. The proposed compensation structure is part of a new long-term incentive scheme that will be presented to shareholders for approval at the annual general meeting in November.

The maximum figure of £20.02m is contingent upon Lewis meeting specific performance targets, including a 50 per cent increase in the company’s share price. If the share price bonus is not achieved, his total compensation could reach £15m if all available bonuses are claimed. However, the group has stated that his target remuneration is £9.4m. This amount is still more than double the £3.6m paid to his predecessor, Debra Crew, in her final full year in charge before departing the FTSE 100 firm in July last year. Nick Jhangiani, who served as interim chief executive before returning to his role as finance chief, could take home as much as £10.6m next year.

Lewis, who assumed the chief executive role in January, has been described as having a reputation for dramatic corporate turnarounds. Reports indicate that he has instructed some teams to reduce headcount by up to 30 per cent. Even before the formal launch of his turnaround plan, the group had already cut nearly 2,000 jobs. Total headcount fell by six per cent to 27,938 in the year to June. The majority of these reductions occurred in Africa, where 928 jobs were lost, while 405 corporate roles were removed across the business.

Diageo reported a three per cent decline in sales to $19.6bn in the year to June. In response, Lewis unveiled an $850m cost-cutting plan aimed at improving financial performance. He told shareholders earlier this month that there is hard work ahead in efforts to boost sales and profit amid tight consumer spending. The company consulted with about 40 per cent of its shareholders before proposing the new pay model. A spokesperson stated that the proposed remuneration policy is designed to retain and attract high-quality leadership to deliver the new strategy and improve long-term value for shareholders.