Corina Pons

MADRID (Reuters). – A daughter Inditex (MC:). Zara’s billionaire founder assumes the reins on Friday. He has a greater role than initially expected, but a lower salary than his veteran predecessor.

Marta Ortega will serve as Amancio Ortega’s youngest daughter. Marta Ortega will not only act as non-executive Chairperson, which was previously announced in November. But, Marta Ortega will also be responsible for the firm’s communications strategy and internal audit, said the company in an annual report regarding remuneration to directors, sent last month by Spain’s stock regulator.

Zara’s fashion business, which generates 70% of Inditex’s revenue, will continue to be managed by the 38-year old, Zara said.

    In return, Marta Ortega will receive an annual salary of one million euros ($1.1 million), the document showed – 100,000 euros for overseeing the board and 900,000 euros for her work as non-executive president.

Marta Ortega, along with Oscar Garcia as CEO, replaces Pablo Isla as veteran executive president. He oversaw an 8-fold rise in Inditex’s share price, which has seen the company’s market value jump to nearly 93 billion euros.

With a handshake, he said goodbye and promised to not work for any competitor in the next two years. Inditex paid Isla 12.4million euros for his final year as company president. This is nearly twice the amount he was awarded in 2020.

    Inditex said it determined Marta Ortega’s salary based on “her knowledge of the retail business in the fashion sector and of the Inditex Group.”

Marta Ortega, though her job isn’t directly comparable with Islas, will maintain a thorough overview of company operations.

Santiago Alvarez de Mon a professor at the IESE Madrid business school, stated that Ortega would not have to manage the financial day-to-day, but she would be in charge for the evaluation units, which will allow her ensure everything is going smoothly.

This is the moment when the largest global fast fashion retailer in terms of sales faces the prospect of losing its revenues to Russia. Russia has been forced to close down operations after the invasion of Ukraine. Inflation is soaring, which will force the company’s prices up.

Zara, and other group chains such as Stradivarius and Pull&Bear, must also deal with the rapid rise of Shein, the world’s largest online-only fashion company selling cheap clothes to primarily younger customers.

    JITTERS

Market jitters started when the announcement of Isla’s resignation and his replacement Marta Ortega/Oscar Garcia erupted initially.

But investors were reassured a team of managers, who have been with the company for anything between 18 and 42 years, will support the new leaders.

Ortega senior owns 59.2% Inditex shares and is monitoring this transition closely, according to sources. 

Guido Stein (a Spanish author, professor of companies leadership at IESE) said that Marta Ortega was reasonable to be paid less then Isla.

    “She is just starting out in that position and her family receives much more from the company’s profits,” he said.

Ortega senior retired in 2011. He remains on the board with a payment of 100,000 euro annually.

According to sources, the dividends will amount to 1.7 billion euro this year for the 86-year-old. 

    Isla told journalists at his last press conference in March that he had “maximum confidence in the future of the company” under the new leadership team.

Royal Bank of Canada Deutsche Bank (DE:), Reuters analysts said they didn’t expect any strategy changes when Ortega is back at the top.

    “As a family member who has been closely involved with the business over the last few years, Marta Ortega will be significantly more involved than most non-executive chairpersons would be,” Deutsche Bank’s Adam Courcharne said.

    ($1 = 0.9048 euros)