Pay rise for Klarna chief Sebastian Siemiatkowski despite the company racking up its biggest ever loss
Klarna’s chief executive saw his pay soar to over £1million last year as the company racked up its biggest ever loss.
Sebastian Siemiatkowski, the founder and chief executive of the buy-now-pay-later (BNPL) firm, was handed £1.05million in 2022 – a 35 per cent jump on the previous year.
The pay rise came despite Klarna plunging to a loss of £830million, the biggest since the firm was set up in 2005 and far worse than the £522million loss in 2021.
Paid now: Klarna chief exec Sebastian Siemiatkowski (pictured) was handed £1.05m in 2022 – a 35% jump on the previous year
The bleak figures came amid mounting scrutiny of the BNPL industry as it explodes in popularity among shoppers who cannot afford to or do not want to pay for goods in full up front.
It is feared many users – particularly the young – are unknowingly building up debt which they will struggle to pay off amid the cost of living crisis.
However, analysts suggested that any regulatory clampdown on the industry could work in favour of the big players such as Klarna as smaller ones fold.
The privately owned Swedish company saw its valuation slashed 85 per cent from £38billion to £5.5billion in a funding round last year. It also axed 700 staff in two rounds of layoffs.
Announcing 41-year-old Siemiatkowski’s pay alongside its results yesterday, Klarna said its remuneration policy was in line with other tech firms ‘in order to hire and retain the best talent’.
Klarna was regularly profitable until it started an aggressive rollout in the US four years ago.
Although the States is now its largest market by revenue, Klarna has not posted an annual profit since 2018, with marketing and employment costs taking their toll.
Klarna was more upbeat about the fourth quarter of 2022, where losses narrowed to £150million from £364million a year earlier.
Credit losses, which are incurred when customers do not pay back what they owe, were down 18 per cent to £110million.
With this in mind, the company said its goal was to return to profitability by the summer of 2023.
Founded in 2005, Klarna has exploded in popularity in recent years, allowing customers to split the cost of purchases into instalments, often with no interest or charges unless they fail to pay back on time.
The method of payment is popular with younger shoppers and in sectors such as clothing and fast fashion. Klarna has partnerships with major brands, including Nike, H&M and IKEA.
But the BNPL industry, which includes other major players such as Clearpay and Laybuy, has come under growing scrutiny.
Research by Barclays Bank and the debt charity StepChange last year found almost a third of BNPL borrowers said their loans had become unmanageable.
BNPL products have been classed as ‘high-risk’ by the City watchdog alongside other unregulated investments such as crypto-currency.
The Treasury unveiled draft proposals this month that would allow the Financial Conduct Authority to ban firms that failed to conduct adequate credit checks on customers.
The Government plans to put legislation before Parliament later this year.