Tesco is facing a shareholder backlash at its annual general meeting on Friday over the pay-offs it gave to its former chief exec and finance director.

Fund manager trade body Investment Association has circulated an ‘amber top’ to members over the £1.2m pay-off for former chief executive Philip Clarke and £1m for finance director Laurie McIlwee, according to The Sunday Times.

Earlier in the year Tesco revealed to the stock market that it had concluded it did not have the basis for continuing to withhold the pay-offs after taking legal advice.

Nevertheless, in its annual report last month it said it would pursue the recovery of Clarke’s pay-off if any new evidence revealed there was gross misconduct under his leadership.

It explained that it has “explicitly reserved the company’s rights to pursue recovery of these payments”.

Tesco is being investigated by the Serious Fraud Office after it emerged the company had overstated its profits by £263m.

The overstatement happened under Clarke’s tenure and the full breadth of it was uncovered following a probe by new boss Dave Lewis.

Tesco is also expected to reveal a drop in sales on Friday as it unveils its first quarter trading update on the same day as it holds its AGM.