Wednesday 24 January 2018

Tesco to face shareholders over pay for bosses

PA
PA
Tesco Chief Executive Philip Clarke. Photo: PA

Holly Williams

SUPERMARKET Tesco will be next in the firing line over pay and performance when it faces investors today.

The retail giant holds its annual shareholder meeting in Cardiff amid pressure over pay plans for bosses and calls for a review of its loss-making US business.



Shareholder body Pirc has recommended Tesco investors vote against the supermarket's remuneration report, claiming the pay policy has the potential to be "wholly excessive".



Tesco chief executive Philip Clarke waived his £372,000 bonus after the group issued its first profits warning in 20 years in January.



But he still earned a £1.6 million salary in the last financial year and Pirc said the remuneration report revealed that combined pay - including historic awards that vested and were exercised in the year - exceeded 300pc of executives' salaries.



A swathe of firms have been hit by investor anger over executive pay in the so-called current shareholder spring.



Firms including marketing giant WPP have suffered significant shareholder rebellions over pay in recent months, while the spate of investor activism has claimed high profile scalps including Sly Bailey at Trinity Mirror, Aviva's Andrew Moss and AstraZeneca's David Brennan.



But pay is not the only contentious issue for Tesco at its annual meeting, with the group's embattled US arm Fresh & Easy also in the spotlight after Change to Win (CtW) - an investor group that works with US union-sponsored pension funds - demanded an urgent evaluation of the division.



It wants a committee of non-executive directors to review the future of Fresh & Easy after five years of losses and is seeking shareholder backing for three amendments to the annual report and accounts.



Tesco has so far rebuffed CtW, saying its proposal was "union motivated and follows several years of union opposition in the US".



A spokesman added: "CtW is not a shareholder, and does not speak for shareholders.



"Fresh & Easy continues to grow and innovate and is showing positive sales momentum.



"We are confident the business is moving in the right direction."



Tesco has had a difficult year so far after its shock profits warning in January, when it admitted it messed up its pricing strategy.



There has been little relief since then despite a £1 billion turnaround programme, with the group's recent sales figures lagging behind that of smaller rival Sainsbury's.



Tesco suffered a 1.5pc fall in underlying sales in the 13 weeks to May 26, while Sainsbury's recorded a 1.4pc underlying sales rise, although the latter included the Queen's Diamond Jubilee week.



Kantar Worldpanel's latest market share figures heaped yet more pressure on Tesco, showing a fall from 31.4pc to 31pc in the three months to June 10.



Mr Clarke's decision earlier this year to forgo his bonus in the light of poor performance has failed to dampen the flames over pay.



Pirc said salaries were still "at the top end of the sector", although it did praise the group for improving disclosure on pay.



The shareholder group also described Tesco's use of earnings per share and return on capital employed as targets for its main management incentive scheme as "commendable".



Tesco said: "Pirc have recognised and commended many of the positive changes we have made.



"We consulted a large number of our shareholders on our remuneration and have received positive feedback."

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