Tesco's sigh of relief as executive pay approved

SUPERMARKET giant Tesco avoided a repeat of last year's pay revolt as shareholders at its annual meeting yesterday backed a new executive pay scheme.

The group had made significant changes to its directors' pay structure after nearly 40 per cent of shareholders rebelled at its annual meeting last year.

These included scrapping a controversial bonus scheme for Tim Mason, the head of its loss-making US business Fresh & Easy, and setting targets for bonuses based on earnings per share and underlying profitability.

Shareholder lobby group Pirc had still advised shareholders to vote against the plan, describing some of the performance targets as not challenging enough while it also objected to the inclusion of property sales in the performance measures and called the total package "excessive".

Despite these concerns, Tesco shareholders voted 97 per cent in favour of the remuneration report and new scheme, which the firm said was more collegiate, simpler and aligns directors' interests with those of shareholders.

Ironically, American investor group CtW has raised new concerns Mason's incentive pay will be substantially de-linked from Fresh & Easy's performance, "raising questions about executive accountability for continuing losses in the US".

It called on incoming chairman Richard Broadbent to address investor concerns about mounting losses at the US subsidiary by conducting an "objective and independent strategic review".