Revolt at AGM
Tesco shareholders reject CEO’s £6.4m pay deal
Tesco enjoyed a solid first quarter (pic: Terry Murden)
More than two-thirds of Tesco shareholders voted down the grocery giant’s pay report at today’s annual meeting.
Among those eligible to vote 67.3% were opposed the directors’ remuneration report with just 32.7% in favour.
It had been expected that shareholders would vote against the £6.4m pay packet of soon-to-depart chief executive Dave Lewis.
Proxy advisors ISS and Glass Lewis advised investors to vote against the bumper reward for Mr Lewis before he steps down on 30 September after six years in the role.
Concern was raised after the board omitted online grocer Ocado from the list of peers against which it measures director pay. It argued that Ocado was now more of a techn firm than a food supplier.
The move had the effect of increasing Mr Lewis’s bonus to £2.4m from £800,000.
As is customary at AGMs the vote is advisory, meaning that Mr Lewis is still entitled to his payout in full.
In a statement, the board said: “While the board is pleased that all other resolutions were carried with very large majorities, we are disappointed that the advisory vote on the directors’ remuneration report was not passed.”
Tesco said it “will continue to engage with shareholders to fully understand their concerns and will consider the full range of feedback” for next year’s AGM.
The row, however, cast a cloud over Tesco which has been among the big winners from the lockdown.
Online sales rocketed in the first quarter as consumers coped with the lockdown.
A 90% surge in May contributed to a 48.5% rise over the 13 weeks to the end of May.
Sales in convenience business grew by 9.5% including a particularly strong performance from One Stop.
Group trading rose 8% to £13.4 billion, though Edinburgh-based Tesco Bank saw revenue fall 26.5%, as activity in banking and money services reduced, including the temporary closure of the travel money business and significantly reduced ATM income.
Provision for potential bad debts at Tesco Bank increased to reflect market conditions and the company now expects it to report an operating loss of £(175)m-£(200)m this year. Its capital ratios and liquidity remain strong.
Chief executive Dave Lewis said: “In just five weeks, we doubled our online capacity to help support our most vulnerable customers and transformed our stores with extensive social distancing measures so that everyone who was able to shop in store could do so safely.
“The costs of doing this have been significant and only partly offset by business rates relief and increased volume. We see the balance as an investment in supporting our customers at a time when they need it most.”