Tesco revamps exec pay after rebellion
TESCO has moved to head off a repeat of last year’s shareholder revolt by overhauling its executive pay structure.
The shake-up, revealed in Tesco’s annual report, sees the scrapping of an incentive scheme which benefited US boss Tim Mason.
His £4.2m in pay and bonuses was blasted by US institutional investors at last year’s AGM after Tesco’s US start-up, Fresh & Easy, struggled.
Last year 47 per cent of shareholders either voted against or abstained in a vote over executive pay.
The retailer’s latest annual report said: “In light of the renewed focus on a collegiate approach to remuneration, together with Mr Mason’s appointment to the roles of deputy CEO and chief marketing officer, it has been agreed that Mr Mason will no longer be eligible for awards under the US annual or long-term incentive programmes.
“Mr Mason will therefore no longer participate in the US LTIP [long-term incentive plan] and the 2m shares granted to him in 2007 will lapse.”
Despite the shake-up chief executive Philip Clarke, who started his job in March, can earn an annual long-term bonus of up to 275 per cent of his £1.1m salary, with a further 250 per cent through a short term bonus.
He can be awarded an even higher figure in “exceptional circumstances” according to the document. The annual report revealed that former chief executive Sir Terry Leahy received £4.2m in the year to February, down from £5.2m the previous year.
This included a cash and share bonus of about £2.7m and base salary of £1.4m.
The debate over boardroom pay has been reignited this week with a survey showing that chief executives of blue-chip companies enjoyed a median pay rise of 32 per cent last year.
That compared with a seven per cent rise in the FTSE 100, and a two per cent increase in general workers’ pay, according to pay consultancy MM&K and corporate governance group Manifest.
Tesco’s AGM is on 1 July.