Bonus clawback rule for new Tesco Ireland CEO
Tesco's top Irish executives could have to hand back bonuses in future if results are misstated or they damage the company's reputation.
The supermarket has introduced a clawback provision for executive directors across the group for up to five years after a bonus is awarded.
The Irish executives subject to the clawback provision are chief operating officer Geoff Byrne, commercial director John Paul O'Reilly, corporate affairs director Christine Heffernan, marketing director Henry Dummer, personnel director Geraldine Casey, legal director Sarah Gallagher, chief financial officer Adrian Lewis and new Tesco Ireland chief executive Andrew Yaxley who has replaced recently-retired Phil J Clarke.
Tesco said the clawback provision would "ensure the company is able to take back awards in the event that results are materially misstated or the participant has contributed to serious reputational damage".
Annual cash bonuses can be called back for a period of up to three years after they are handed out, while long term share bonuses will remain subject to a potential clawback for up to five years.
The decision was made after Tesco was forced to pay more than €2m in bonuses to its former group chief executive and group finance director who were ousted before last year's catastrophic accounting scandal came to light. The company overestimated profit by more than €250m by wrongly processing supplier payments.
Ex-group chief executive Philip Clarke (no relation to the retired Irish chief executive), who oversaw a difficult period marked by a series of profit warnings, was paid £1.2m for loss of office.
Clarke's three year tenure as head of Britain's biggest supermarket ended in tatters last July following a stark profit warning, having presided over declining sales.
Ex-group finance director Laurie McIlwee collected £970,880.
Tesco tried but failed to withhold the payments while it carried out an investigation into the accounting scandal.
It said it was contractually committed to pay up unless it could establish a case of gross misconduct
"We have explicitly reserved the company's rights to pursue recovery of these payments," the retailer said in its annual report published last week.
Last month, Tesco revealed it had crashed to the biggest loss ever recorded by an Irish or British retailer, slumping £6.4bn (€8.9bn) into the red after huge writedowns on the value of its property portfolio and stock.
The company has closed stores, laid off thousands of staff and completely shaken up its management team as new group chief executive Dave Lewis, poached from Unilever tries to revive the grocer's fortunes.
Half of Lewis' annual bonus will be pegged to the company's sales growth, 30pc to profit and 20pc on the delivery of operational and strategic goals.
By comparison, only 18pc of Clarke's annual bonus was linked to sales growth.
Sunday Indo Business