Woolworths dangles R100 million carrot for new CEO

Woolworths has introduced a special once-off outperformance share award, potentially worth as much as R100 million, for its incoming CEO, Sam Ngumeni.

Ngumeni has been tasked with improving the retailer’s share price and earnings over the next five years.

His award is reliant on the retailer’s share price increasing significantly – or even doubling – and its adjusted headline earnings per share (HEPS) growing by between 10% and 15% per year.

In addition, Ngumeni’s been tasked with improving the retailer’s return on capital employed (ROCE).

This is a tall order, but if Ngumeni manages it, he will be awarded 995,715 Woolworths shares. These shares are currently worth R51 million, but if he reaches the board’s share price target of R100, they would be worth around R100 million.

This was revealed in a notice to shareholders posted by Woolworths on the morning of Thursday, 26 March 2026.

It follows the retailer’s announcement on 12 March that its long-standing CEO, Roy Bagattini, will retire at the end of September 2026.

Bagattini will step down from the helm at the end of May, at which point Ngumeni will become the new Woolworths CEO starting 1 June 2026.

Bagattini has led the company since February 2020, during which time the retailer has experienced some significant struggles.

From an operational standpoint, the retailer was faced with the Covid-19 pandemic, a struggling clothing business, and severe issues in its Australian business, the Country Road Group.

Between the end of January 2020 and today, Woolworths’ share price has grown under Bagattini’s leadership, up about 14% since he took over.

However, at around R50.91 at the time of writing, Woolworths’ current share price remains far below its historic peak of R102 per share reached in October 2015.

With Ngumeni set to take over soon, Woolworths is now hoping that a R51 million to R100 million award will be enough to incentivise further growth under his leadership.

However, this award will not come easy, with Ngumeni tasked with improving Woolworths’ share price, growing adjusted HEPS, and improving the group’s ROCE.

Ngumeni’s to-do list

Over the next five years, until June 2031, Ngumeni must increase Woolworths’ share price to R80 to receive half the award (497,857.5 shares) or to R100 – double the current share price – to receive the full award (995,715 shares).

Over the same period, the new CEO must grow Woolworths’ adjusted HEPS by 10% per annum to receive half the award, and by 15% per annum for the full award.

In addition, Ngumeni must increase the retailer’s ROCE by its weighted average cost of capital (WACC) plus five for half the award, or by WACC plus eight for the full award.

Each of these targets has different weightings, with share price ranked the highest at 50%, followed by adjusted HEPS growth at 30%, and ROCE at 20%.

“The board has full confidence in Mr Ngumeni’s ability to execute effectively against the group’s strategic priorities and to deliver on key strategic and operational initiatives across the company,” Woolworths said.

To make this award happen, Woolworths has purchased 995,715 of its own shares on the open market for a total value of R51 million.

These shares will be held in escrow for the duration of the five-year vesting period.

“Over this period, all dividends will be reinvested into acquiring additional Woolworths shares, which are subject to the same performance conditions as the outperformance share award and any resultant unvested shares and dividends will be forfeited,” the retailer explained. 

It should be noted that, should Ngumeni succeed and achieve these targets, the shares he receives will be worth far more than the current R51 million.

For example, if Ngumeni manages to increase Woolworths’ share price to R100, these shares will be worth R99.57 million.

Ngumeni’s performance conditions can be seen in the table below.