As the consequences of the collapse of Toys R Us reverberates around the UK, both for the retail and consumer, analysis of the fall of the company has begun and it does not make pretty reading for its executive and “advisors.”
The Sunday Telegraph carried out an extensive investigation into the earnings of their CEO from 2014 to 2016 learning of a shocking growth in earnings for those at the top of the company as it edged closed towards its demise:
Analysis by The Sunday Telegraph of a web of 17 Toys R Us subsidiary companies has revealed that payments to its UK boss soared from £356,000 in 2014 to £1m in 2015 and another £1.3m for the year ending 30 January 2016.
That director is understood to be retail veteran Roger Mclaughlan who led the retailer over the period and now heads garden centre business Wyevale. Toys R Us declined to comment.
This sharp increase in wages for their CEO came despite the company recording losses in seven of the past eight financial years.
Excuses of a large tax bill being the root of their problems are largely unfounded. The Value Added Tax bill is the equivalent of US Sales Taxes, and Toy’s R Us had already collected the monies from their sales. VAT is collected by the retailer to pass on to the Revenue service, so spending it and thus not having it when it is due to be paid across is less than a valid excuse.
Ultimately the poison pill that brought TRU down was an exorbitant deficit in its pension fund. A failure to fully fund the pension over a number of years meant that by 2017 over £30 million was due to the fund. Unable to pay this sum in, and with investors and potential suitors for the business put off by this liability, time ran out.
The kicker for UK taxpayers is that they are left out-of-pocket by the tune of the £15 million in unpaid VAT, whilst also liable to pick up the responsibility for the pension deficit.