Supermarket giant Tesco has overhauled the way it remunerates its top executives, following a revolt by shareholders.
At the company’s annual shareholder meeting last year, 47 per cent of investors either voted against Tesco’s executive pay scheme, or abstained. In response, the firm has announced a shake-up of the way it rewards senior executives.
According to an article by the Financial Times, Tesco will combine its four long-term remuneration plans into a single scheme. It will scrap executive share options and instead offer top managers shares of “comparable expected value”, deferred for three years. In situations where results have been “materially misstated”, a committee will be able to reduce deferred share awards.
All of Tesco’s executives, including chief executive Philip Clarke, will be affected by the changes. Mr Clarke will receive a basic salary of £1.1m, down from the £1.4m that former chief executive Terry Leahy received last year.
A source said the new system would be simpler for shareholders to understand, although it is likely to see the company’s directors being paid roughly the same amount.
