Tesco workers to get £98m share windfall

Published on Tuesday 26 May 2009 10:21

SUPERMARKET giant Tesco is to award more than 207,000 staff with £98 million worth of share bonuses.

The company's Shares in Success scheme provides staff with free shares worth the equivalent of 3.6 per cent of their annual salary, up to a maximum of 3,000.

This year's payout, confirmed in the company's annual report published today, comes after a record year for the firm, which saw profits smash through the 3 billion barrier for the first time.

All staff who had been with Tesco for at least a year at the end of February, from checkout workers to store managers, are entitled to the bonus.

Shares are held in trust for five years and then can be sold by employees on a tax-free basis.

Around 66,000 staff who have held shares in the scheme since 2004 also today become eligible to sell the 37m of shares they were awarded five years ago.

The bonus haul is a record for Tesco, the UK's biggest private sector employer, and are in addition to the 238m paid last year to management and staff through incentive and share schemes, including 21m of pay and bonuses to the executive board led by chief executive Sir Terry Leahy.

Tesco, which employs around 1800 staff in Edinburgh, said in the annual report that executive director salaries were increased by an average of 5.4 per cent from July 1, 2008.

Sir Terry received a bonus worth 250 per cent of his 1.37m salary, as well as benefiting from share schemes.

He already owns more than 5m ordinary shares in the firm, which are currently worth more than 17.5m.

In its annual report, Tesco said: "Tesco has a stable and successful management team, and motivating that team at senior levels to deliver yet higher levels of performance is vital to our ongoing success.

"We believe our incentives should support the continued progress within the existing business, the strengthening of our returns from the International business and new retail lines as well as the creation of significant new businesses."

Last month, Tesco said pre-tax profits surged by 8.8 per cent to 3.13bn in the year to the end of February on the back of a 13.5 per cent increase in revenues, to 59.4bn.

It had noted a shift by consumers towards its Discounter line, which it brought in to compete with strong competition from budget supermarket chains like Lidl and Aldi.

However, despite its recent profit and revenue figures, its rate of profit growth has slowed from the 11.8 per cent increase posted a year ago to 8.8 per cent.

It said UK like-for-like sales increased by 3.4 per cent in the first six weeks of the new financial year, with total sales excluding petrol up 12 per cent, helped by a "strong" international performance.