Tesco shareholders have expressed concern over outgoing boss Philip Clarke’s pay off.
Clarke may be paid 18 months of his salary after his departure, revealed on Monday, compared to the City standard 12-month pay.
Shareholders are concerned Clarke may be paid his full £1.5m wage for another six months and then receive 12 months’ salary and benefits worth £1.2m when he leaves the grocer in January, according to the Telegraph.
One major investor said: “People get paid for delivery, not for not delivering.”
Sarah Wilson chief executive at shareholder advisory group Manifest said: “This is generally frowned upon. Investors expect to see any termination payments capped at 12 months. Is this some sort of settlement? It is unusual. People will jump to conclusions in the absence of an explanation.
In a statement, Tesco Clarke will be entitled to receive £1.2m when he leaves, which includes his base salary of £1.1m and a £72,000 payment in lieu of benefits comprising a car. No additional amount will be paid relating to his pension.
It added that his share awards through the Long Term Performance Share Plan will be £1.5m, applying the closing share price on July 21, while the value of the Executive Incentive Plan is £1.2m.
The discretionary share option plan awards can be exercised within 12 months but all options are currently underwater and have no value.
Clarke and his wife will also be entitled to health cover for himself and his wife for life.
Tesco has hired Unilever personal care president Dave Lewis to replace Clarke. He starts in October when Clarke will step down from the board and remain available for support in the transition period.
The grocer also issued a profit warning because the investment it is making to improve the customer offer is hitting profits and sales. It comes after it posted the worst quarter in 40 years.