From stock options to pension plans: how do fashion giants reward their staff?

Giving away shares, selling them at discount prices, providing pension plans or even health or life insurances. These are some of the incentives with which fashion giants reward their workers in order to retail talent.

Overall, the four titans of the sector employ almost half million people. Only in the last fiscal year, Inditex, H&M, Fast Retailing and Gap enlarged their workforces with 11,800 new contracts.

Inditex approved in 2016 an incentive plan that will last until 2020 aimed at members of the board and other employees in the group. The plan is based on a multi-annual bonus in cash and the delivery of shares. On January 31, the first stage of the plan was completed.

Only in 2018, such rewards amounted to 15.3 million euros, of which 8.4 million were in cash and the rest of them, in shares. On the other hand, the company has been carrying out since 2015 an extraordinary profit-sharing plan that is compensated every year. This year, the group decided to introduce this reward system instead, linking it to the evolution of sales instead of the profit.

Inditex changed its reward plan during the last year to link it to sales

Inditex has at the end of fiscal year 2018 a workforce of 174,386 employees, compared to 171,839 it had the previous year. In the last five years, the Spanish fashion distribution giant has increased its workforce by 27%. As the company explains in its annual report that corresponds to 2018, 62% of its employees is below thirty years old, and 87% of them works in a store.

Meanwhile, H&M launched in 2010 the H&M Incentive Program (HIP) with the  donation of more than 4 million shares valued in 1 billion Swedish crowns (94.4 million euros, at the current exchange rate), brought by the Persson family.

This program involves the entire H&M workforce, whatever their position. However, the employee receives it after reaching 62 years old or after being ten years in the company. H&M added a total of 123,283 workers at the end of the fiscal year, 2.6% more than the previous year.

H&M increased its workforce by 2.6% last year

The third largest distribution group in the world, Fast Retailing, only discloses the number of full-time employees (which leaves out a large part of the in-store staff).

As of February 28, 2019, Uniqlo’s parent company employed 53,571 full-time workers, 20.6% more than at the end of fiscal year 2017 (closed in August). Ten years ago, the number of Fast Retailing employees barely reached 11,000 people.

In its latest annual report, the group does not detail any type of bonus, although it came to have internal competitions with which it rewarded in-store staff that obtained better results.

The US Gap, on the other hand, has a long-term incentive plan that was launched in 2016 and reactivated in 2019, which consists of an additional share-based compensation. There is also a merchandise purchase plan for employees with a 15% discount on the market price.

Gap has kept employing 135,000 workers since 2016. That year, the company reduced its number of employees by 4% in a period of full reorganization of its network of stores.