The board of online retailer Kogan is planning to award millions of dollars worth of incentives to its top two executives as coronavirus-driven sales soar.

The massive sales bump and generous reward for its executives come as questions surround Kogan’s alleged price gouging of products during the coronavirus pandemic.

On May 12, Kogan.com revealed its gross profit had soared by 150 per cent in the year to April, as Australians purchased work-from-home equipment during the strict restrictions.

In the same trading update, the company’s remuneration committee revealed long-term incentive plans for chief executive and founder Ruslan Kogan and chief financial officer David Shafer.

While many executives at other companies have forgone bonuses and are receiving reduced salaries during the coronavirus crisis, Kogan plans to issue 3.6 million options to Mr Kogan and 2.4 million options to Mr Shafer.

The options, based on Kogan’s three-month, volume-weighted average price (VWAP) to April 30, have the potential to be worth tens of millions of dollars.

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The options do not have a vesting period but Mr Kogan and Mr Shafer must remain with the company until the end of the 2023 financial year.

Defending the proposed incentive plan, Kogan chairman Greg Ridder said: “The remuneration committee has received advice from an independent expert and believe that the proposed option grant will generate long-term shareholder value.

“We believe the grant is in the best interests of all shareholders.”

The option grant is yet to be approved by the company’s shareholders.

A question of price

While Kogan revealed its gross sales were up 100 per cent in April, the company faces questions about inflated product prices.

On March 19, in the days leading up to the shutdown of Australia’s gyms, a set of 24kg Fortis dumbbells had a sale price of $249.

Over the next five days:

• March 21: $269
• March 22: $369
• March 23: $689
• March 24: $999

The price dropped to $399 on April 10 – where it has remained.

The peak price of a set of two Fortis dumbbells was $999 on March 24 to April 9.

Before falling to $399 on April 10.

“Broadly, there are no powers under the Competition Act to deal with price gouging,” former ACCC chair Allan Fels told The New Daily.

“There have been a couple of limited recent laws about price gouging in relation to essential medical supplies, under separate legislation handled by [Home Affairs Minister] Peter Dutton, but they don’t deal with gym equipment or that sort of thing,” Professor Fels explained.

Amy Pereira, Choice campaigns and policy adviser, said Kogan has already been caught inflating the cost of medical equipment during the coronavirus crisis.

“Kogan has failed to meet community standards during COVID-19 by sharply increasing its prices on items that people need most,” Ms Pereira said.

“When we’re at our most vulnerable, we should be able to trust that the prices for essential goods, such as hand sanitiser and face masks, remain reasonable and we’re not going to be exploited.”

In 2019, the ACCC took Kogan to Federal Court alleging it ran a 10 per cent “TAXTIME” sale promotion on more than 600 products, but actually increased prices – in most cases above 10 per cent – immediately before the promotional period began.

The company also paid a $32,400 penalty in 2016 for “false or misleading representations” in a Father’s Day promotion and was reprimanded for misleading savings claims in 2009.