Tesco avoids repeat of pay revolt

Supermarket giant Tesco avoided a repeat of last year’s pay revolt as shareholders at its annual meeting backed a new executive pay scheme.

Tesco had made significant changes to its directors’ pay structure after nearly 40% of shareholders rebelled at its annual meeting last year.

These included scrapping a controversial bonus scheme for Tim Mason, the head of its loss-making US business, and setting targets for bonuses based on earnings per share and underlying profitability.

Shareholder lobby group PIRC had still advised shareholders to vote against the plan, describing some of the performance targets as not challenging enough while it also objected to the inclusion of property sales in the performance measures.

Despite these concerns, Tesco shareholders today voted 97% in favour of the remuneration report and new scheme, which the firm said was more collegiate, simpler and aligns directors’ interests with those of shareholders.

Chief executive Philip Clarke could pick up nearly £7m in pay and bonuses this year under the plan if the company meets all its targets.

He can earn an annual long-term bonus of up to 275% of his £1.1m salary and a further 250% through a short-term bonus.

Other executive directors get slightly less in percentage terms under each plan, though Tesco said in exceptional situations it may increase the long-term pay-out to 350% of salary.