Tesco's Irish staff forfeit options in shares slump
Tesco's Irish employees forfeited 3.5m share options with a face value of about £7.4m (€8.7m) last year after the options spent the bulk of the year underwater, according to the retailer's latest annual report.
In the 12 months to the end of February, Tesco's staff in Ireland exercised 17,668 options worth a total of just £26,500 (€31,235), based on the weighted average exercise price (WAEP) of £1.50.
But the figure was up on the £7,500 worth of options exercised by staff in Ireland in the previous 12 months.
Tesco has about 14,500 staff in Ireland.
The 3.5m shares that were forfeited last year by them had a weighted average exercise price of £2.07.
Tesco shares touched about £2.18 towards the end of 2016 but spent most of 2016 below the WAEP.
The 2m shares forfeited by staff in Ireland in the year to the end of February 2016 had a weighted average exercise price of £2.64 each.
At £1.78 yesterday, Tesco shares are trading at less than half the level they were at in 2013, and are way off a peak of £4.79 they were at in late 2007.
The company's shares were hit by an accounting scandal and also as it grapples with intense retail competition in the UK.
In Tesco's 2007 financial year, staff at its Irish business forfeited just 508,283 share options with a £1.1m face value. They exercised options over 801,622 shares with a WAEP of £1.91 that year, at a cost of £1.5m.
The annual report published yesterday also showed that at the end of February this year, there were 443,702 shares options that were exercisable at that date for Irish staff, but they had a WAEP of nearly £3.31 per share.
Tesco, whose group chief executive is Dave Lewis, noted that its Irish savings-related Share Option Scheme permits the grant to Irish staff of options in respect of ordinary shares linked to a building society or bank save-as-you-earn contract for a term of three or five years.
Staff can make contributions of between €12 and €500 every four weeks.
The annual report also shows that the deficit at Tesco's Irish defined benefit pension scheme stood at £107m (€126m) at the end of February. But the figure is lower than the £145m deficit in the scheme a year earlier.
Tesco's like-for-like sales in Ireland slipped by 0.1pc in the last financial year, when it posted revenues of €2.48bn here, excluding VAT and including fuel.
"We have a leading position in the market in volume terms and have further grown volume share by making improvements across our customer offer, with a focus on fresh produce, meat and bakery," it noted.
Based on the value of sales, Tesco is the third-biggest grocery retailer in Ireland with a 21.6pc share. SuperValu is the biggest, and Dunnes second.