Cyber Attack Takes a Bite Out of M&S’s Finances and Operations
- M&S CEO Stuart Machin faces a £1.1m pay reduction due to the cyber attack
- Cyber attack led to a 14% drop in M&S’s share price, affecting performance share plan and deferred bonus
- Online sales severely impacted with over £75m loss in sales so far
- M&S grappling with higher costs of dealing with the cyber attack
- Company may not fully recover from the damage with £100m insurance payout
- Retailer’s transformation plans could be affected by ongoing disruptions
Marks & Spencer (M&S) CEO Stuart Machin is set to face a significant pay reduction of up to £1.1 million following a cyber attack that has severely impacted the retailer’s operations and stock value. The ongoing cyber attack, which compromised personal and staff data, left M&S unable to accept online orders for over three weeks, causing a 14% drop in its share price and resulting in a loss of approximately £831,000 from Machin’s performance share plan and £233,000 from a deferred bonus. The combined hit to Machin’s compensation could reach up to £2.4 million as he also faces paper losses on shares held through long-term incentive plans. Analysts estimate that M&S has lost over £75m in sales so far and this figure may rise to £125m if online operations are not restored soon. Online sales have suffered greatly, according to Clive Black, retail analyst at Shore Capital. The disruption has cost M&S hundreds of millions in potential sales, and the full impact may not be clear until the next financial year. While the company works to restore its systems, Machin’s pay will likely reflect M&S’s share price performance, with the retailer stating that his compensation is ‘always based on the achievement of company objectives and financial performance.’ The cyber attack has not only led to lost sales but also increased operational expenses as M&S relies on external advisers for system restoration. Although the retailer may claim up to £100m from its cyber insurance policy, analysts remain cautious, believing this payout may not fully cover the extent of the damage.
Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the impact of a cyber attack on M&S’s operations, share price, CEO’s pay reduction, and potential long-term consequences for the company. It includes relevant details and quotes from experts in the field.
Noise Level: 3
Noise Justification: The article provides relevant information about the impact of a cyber attack on M&S’s operations and CEO’s pay reduction, as well as potential long-term consequences for the company’s transformation plans. It also includes expert opinions from analysts. However, it could benefit from more in-depth analysis of the broader implications of such incidents on businesses and society.
Financial Relevance: Yes
Financial Markets Impacted: Yes
Financial Rating Justification: The article discusses the financial impact of a cyber attack on M&S, including a drop in its share price and potential losses of up to £125m in sales. It also mentions the CEO’s pay reduction due to the attack and the possibility of further scrutiny on his compensation. The company’s transformation plans may be affected, and there are concerns about whether their cyber insurance policy will fully cover the damages.
Presence Of Extreme Event: Yes
Nature Of Extreme Event: Technological Disruption (cyber-attacks, major service outages, data breaches, etc.)
Impact Rating Of The Extreme Event: Major
Extreme Rating Justification: The cyber attack caused significant revenue losses for M&S, with estimates of over £75m in sales lost so far and potentially up to £125m more if online operations are not restored soon. It also led to a 14% drop in the company’s share price and impacted CEO Stuart Machin’s compensation by up to £2.4m. The attack disrupted online ordering, affected staff data, and increased operational expenses. While M&S is expected to claim up to £100m from its cyber insurance policy, analysts believe this may not fully cover the damage.
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