Tesco chief executive Dave Lewis has pocketed an annual bonus of almost £3m after leading the supermarket giant back into the black.
Lewis, who was parachuted into the grocer’s hot seat in September 2014, has been handed a cash-and-shares bonus close to the maximum potential payout of £3.15m.
Tesco’s annual report, which will be published tomorrow morning, will reveal the award alongside a 5% turnaround bonus for all of the grocer’s staff.
The £185m bonus pot will be shared between the retailer’s 265,000 employees after it made solid progress against Lewis’s three key strategic objectives.
Lewis has been spearheading efforts to regain competitiveness in Tesco’s core UK business, protect and strengthen the balance sheet and restore trust and transparency among both shoppers and suppliers.
Based on Tesco’s performance against those objectives, Lewis, who earns a £1.25m-a-year salary, can earn an annual bonus worth up to 250% of that sum.
According to the grocer’s annual report from 2014/15, 50% of the bonus is based on sales performance, 30% centres around profits and the remaining 20% is based on “individual measures”, focusing on the delivery of other operational and strategic goals.
Lewis’s bonus means he earned an overall package worth in excess of £4m during the 2015/16 financial year, Sky News reported.
Tesco posted a full-year statutory pre-tax profit of £162m in the 12 months to February 27, following a mammoth £6.4bn loss the prior year.
The volume-based sales turnaround has been driven by investments in price, quality, availability and the hiring of 9,000 additional shopfloor staff to drive customer service in stores.
Tesco’s like-for-like sales in the UK rose 0.9% in the fourth quarter of the year as Lewis hailed “more people buying more things” from the retailer.
During the year, Lewis also rubber-stamped deals to offload its South Korean Homeplus business, close 43 unprofitable stores and pull the plug on 49 planned developments as he moved to shore up the grocer’s battered balance sheet.
It has also simplified the way it negotiates with suppliers and reduced its promotional activity to focus on everyday low prices.