Tesco chief Philip Clarke turns down bonus
PHILIP Clarke, the chief executive of Tesco, has declined his annual bonus after the company posted its first drop in UK profits for at least 30 years.
Other board directors have also seen their bonuses cut.
Last year Mr Clarke received a bonus of £1.39m (€1.7m).
The figures have been published in Tesco's annual report just a week after Mr Clarke wrote to 5,000 senior staff, including most supermarket managers, telling them that their annual bonuses were being slashed from about £10,000 to about £2,000.
Mr Clarke said this morning: “I decided at the beginning of the year that I would decline my annual bonus for 2012. I wasn’t satisfied with the performance in the UK and I won’t take the bonus. I’m confident that we’re tackling the right issues and building a better Tesco for customers, colleagues, shareholders.”
The chief executive, who took control of the UK division at the start of this year after announcing a shock profit warning, was nonetheless paid more than £1m. His total pay packet last year was £1.15m, down from £2.26m the previous year. In the previous year his bonus had been £1.39m.
The other senior directors have seen their bonuses cut to 13.5pc of the maximum possible. This was a slightly harsher cut that the one suffered by the 5,000 senior staff. In the previous year these staff had received received 100pc of their bonus pot entitlement with the longer-servings staff receiving about £12,000, but this year it dropped to 16.9pc the equivalent of between £2,000 and £3,000.
The total bonus pot for staff was £110m.
Tesco managed to post record group profits last year thanks to its expanding overseas business, but sales and profits declined in the UK as recession-hit shoppers drifted to Iceland, Asda and Aldi, as well as more upmarket rivals such as Sainsbury's and Waitrose. The company has said it needs to spend £1bn on revamping its British shops and improving its service.
Mr Clarke turning down his bonus puts pressure on other senior executives to decline theirs.
Over the past month various boardrooms have been hit by the so-called "shareholder spring", which has seen City investors refusing to vote in favour of excessive director pay.
Mr Clarke's pay was made up of £1.09m in base salary and £62,000 in benefits, including gym membership, chauffeur, health insurance and staff discount.
He was not awarded any shares as part of a short-term bonus, but during the year he was granted 752,000 shares as part of a long-term performance plan, which he can take advantage of in two years' time.
The only target used by the remuneration committee that Tesco was able to beat was the target to reduce carbon dioxide emissions.