Tesco stands by its stuttering US operations

TESCO yesterday rejected calls to rethink its strategy for its loss-making US division as it escaped a shareholder revolt over its pay plans.

The supermarket giant, which is pulling out of Japan having spent nine years trying to break into that market, faced pressure at its annual meeting to review its US venture Fresh & Easy, which has failed to turn a profit since launching in 2007.

Investor group Change to Win, which advises US trade union-sponsored pension funds, asked Tesco to establish a committee of non-executive directors to review Fresh & Easy’s future, but chairman Sir Richard Broadbent ruled out such a move.

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Earlier this month, the group reported underlying sales growth at Fresh & Easy had slowed to 3.6 per cent in the first quarter, down from 12.3 per cent in the previous quarter.

Shareholder body Pirc had recommended that investors vote against the retailer’s remuneration report, claiming its pay policy had the potential to be “wholly excessive”, but almost 97 per cent of votes went in favour of its executive pay.

Tesco, which shocked the market with a profit warning in January, tried to defuse anger over pay last month when chief executive Philip Clarke waived his £372,000 bonus in the wake of figures that showed rivals were eating away at its share of the market, although he still received a £1.6 million salary.

Broadbent said: “How businesses reward its executives has been a prominent issue.”