Tesco has simplified its remuneration packages for its executive directors after nearly a third of shareholders voted against its remuneration policy at last year’s AGM.
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All Tesco executives will now participate in the same plan, and it will move from its current four long-term incentive plans to a single plan with two performance measures.
In its annual report published this week, Tesco said all executive directors’ remuneration will be based on overall company targets. This will mean Tim Mason, chief executive of the loss-making US business, will no longer have an incentive plan weighted to the performance of Fresh & Easy.
Mason will no longer receive a special bonus on the performance of the US division. However, he will get an “expatriate allowance” of £282,000 a year above his other remuneration.
Shareholders voiced anger last year primarily because of bonuses paid to Mason despite escalating losses at Fresh & Easy.
Tesco chairman David Reid said: “Over the past year we have consulted shareholders for their views on how we reward executive directors. We have designed a new structure that is simpler and more collegiate, with clear strategic financial targets, delivering broadly the same levels of remuneration as before but in a better way and more aligned with the interests of our shareholders.
“We will apply the same performance measures through the business to the top 500 Tesco managers, ensuring that shareholders’ interests are embedded throughout the leadership of our business.”
Tesco group chief executive Phil Clarke reasserted his vision for Tesco in the report, which includes a seven-part strategy. Areas include growing the UK core market, and to create a set of new brands. It is understood he wants to roll out some new brands in the next few months. They are thought to be
own brands but will not have the Tesco branding.
Departing chief executive Sir Terry Leahy was paid £4.2m in salary, benefits and annual bonus in the last year, down from £5.2m the previous year. Clarke has had his base salary trimmed under the revised scheme, at £1.1m, while Leahy’s was £1.4m last year.