Pay rise for Klarna chief Sebastian Siemiatkowski despite the corporate racking up its largest ever loss
Klarna’s chief government noticed his pay soar to over £1million final yr as the corporate racked up its largest ever loss.
Sebastian Siemiatkowski, the founder and chief government of the buy-now-pay-later (BNPL) agency, was handed £1.05million in 2022 – a 35 per cent bounce on the earlier yr.
The pay rise got here despite Klarna plunging to a loss of £830million, the largest for the reason that agency was arrange in 2005 and much worse than the £522million loss in 2021.
Paid now: Klarna chief exec Sebastian Siemiatkowski (pictured) was handed £1.05m in 2022 – a 35% bounce on the earlier yr
The bleak figures got here amid mounting scrutiny of the BNPL trade because it explodes in recognition amongst buyers who can’t afford to or don’t wish to pay for items in full up entrance.
It is feared many customers – notably the younger – are unknowingly increase debt which they may battle to repay amid the price of residing disaster.
However, analysts recommended that any regulatory clampdown on the trade may work in favour of the massive gamers akin to Klarna as smaller ones fold.
The privately owned Swedish firm noticed its valuation slashed 85 per cent from £38billion to £5.5billion in a funding spherical final yr. It additionally axed 700 employees in two rounds of layoffs.
Announcing 41-year-old Siemiatkowski’s pay alongside its outcomes yesterday, Klarna mentioned its remuneration coverage was consistent with different tech corporations ‘with the intention to rent and retain the most effective expertise’.
Klarna was repeatedly worthwhile till it began an aggressive rollout within the US 4 years in the past.
Although the States is now its largest market by income, Klarna has not posted an annual revenue since 2018, with advertising and employment prices taking their toll.
Klarna was extra upbeat concerning the fourth quarter of 2022, the place losses narrowed to £150million from £364million a yr earlier.
Credit losses, that are incurred when prospects don’t pay again what they owe, have been down 18 per cent to £110million.
With this in thoughts, the corporate mentioned its purpose was to return to profitability by the summer season of 2023.
Founded in 2005, Klarna has exploded in recognition lately, permitting prospects to separate the price of purchases into instalments, usually with no curiosity or prices until they fail to pay again on time.
The technique of cost is well-liked with youthful buyers and in sectors akin to clothes and quick style. Klarna has partnerships with main manufacturers, together with Nike, H&M and IKEA.
But the BNPL trade, which incorporates different main gamers akin to Clearpay and Laybuy, has come underneath rising scrutiny.
Research by Barclays Bank and the debt charity StepChange final yr discovered virtually a 3rd of BNPL debtors mentioned their loans had change into unmanageable.
BNPL merchandise have been classed as ‘high-risk’ by the City watchdog alongside different unregulated investments akin to crypto-currency.
The Treasury unveiled draft proposals this month that may permit the Financial Conduct Authority to ban corporations that did not conduct sufficient credit score checks on prospects.
The Government plans to place laws earlier than Parliament later this yr.
