Tesco chief executive Philip Clarke has declined his annual bonus after the grocer’s poor performance in the UK.

Clarke was in line to receive £372,000, 13.54% of the maximum bonus possible under the performance linked scheme, but decided earlier this year not to take it.

Clarke was paid £1.16m, halving his pay from £2.26m in the year to February 2011.

Tesco confirmed reports last week that its top 5,000 managers will receive a reduced annual bonus of 16.9% of the maximum payable under their bonus scheme. Executive directors will receive 13.54% of the maximum.

According to Tesco’s annual report, its employees in the UK are set to share more than £110m. In the last five years Tesco has awarded more than £500m through its bonus schemes.

The report outlines a year in which Tesco grew its overseas business to £1.1bn of sales, broke the 500,000 employee mark for the first time and launched a £1bn plan to turn around the UK business.

Tesco chief executive Philip Clarke said: “I decided at the beginning of the year that I would decline my annual bonus for 2012. I wasn’t satisfied with the performance in the UK and I won’t take the bonus.

“I’m confident that we’re tackling the right issues and building a better Tesco for customers, colleagues, shareholders.”

He added: “The Tesco team has worked harder than ever in the last year and shown real loyalty and commitment. It has been a challenging year for everyone and it would have been harder still had it not been for the determination of the team. This award is our way of saying thank you for what they continue to do best – delivering for our customers.”

Clarke said Tesco is reworking its non-food space in a difficult market. “It has been tough to achieve growth in sales of discretionary items – not least in the UK, where we have seen a number of specialist general merchandise retailers go into administration – and our UK like-for-like growth in general merchandise, clothing and electricals has remained negative,” he said.

“To adjust to this, we have been allocating more space to the most popular products and improving merchandising. We are committing less capital to new space for non-food and instead focusing more resource on continuing to develop our online capability.”