Contact l Sitemap

home industries issues reasearch weblog press

Home  » Issues » Executive Compensation

UK: Tesco investors attack executive bonus plan

by Karen AttwoodThe Independent
June 30th, 2007

Anger is mounting over a new bonus scheme at Tesco that will reward chief executive Sir Terry Leahy with a £11.5m windfall if the supermarket group's US venture Fresh & Easy succeeds.

One in six Tesco shareholders have refused to back the scheme, it emerged at the company's annual meeting yesterday.

The Fresh & Easy convenience outlets are due to open in Los Angeles, Phoenix, San Diego and Las Vegas from November and the company aims to have 250 stores by the end of 2008.

More than 16 per cent of the proxy votes sent into the supermaket before its AGMwere not in favour of the remuneration package, which has also been criticised by the corporate governance body, Pirc, as "excessive".

The supermarket also came under fire from shareholders yesterday over the conditions of workers employed by some of its overseas suppliers. South African fruit picker Gertruida Baartman, who first confronted the board last year, attended the AGM in central London again, holding a single share supplied by anti-poverty agency ActionAid. She said little had changed in working conditions at the Tesco supplier that employs her, and claimed that the supermarket had broken its promise to ensure she wouldn't face recriminations for speaking out as she was sacked shortly after.

She has since got her job back due to the intervention of trade union groups.

Ms Baartman said: "It would take me four hours to earn enough money to buy a bag of Tesco pears that sell in the UK for £1.39."

Mr Leahy, who received £4.62m in cash and shares last year, would benefit from up to 2.5 million shares under the New Business Incentive Plan if Tesco cracks the US.

Tim Mason, the president of the US operations and chief executive of Fresh & Easy, has defended the remuneration scheme and said the US business was Sir Terry's idea. He said the Tesco chief wrote the business plan with the working title Fresh & Easy more than two years ago.

Mr Mason said the chain would differentiate itself from its home-grown competitors by offering healthy convenience foods for families. "Modern supermarket shopping in the US does not always reflect modern life in America," he added.

The New Economics Foundation, a think-tank, called on the Competition Commission yesterday to include an assessment of evidence of Tesco's "growing level of dominance" and the plight of workers overseas in its inquiry into the major supermarkets.

Policy director Andrew Simms said it would take "more than 47,000 years for one of the Bangladeshi workers, who earns about 5p an hour making garments for sale in Tesco, to earn what Sir Terry was paid last year - and that does not include the chief executives' extra share award".





This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.