The UK’s largest retailer Tesco has today announced a major overhaul of its remuneration system, which will see its bonus scheme simplified.
Going forward the annual bonus of all Tesco executives, including the group CEO and CEO of its US-based business Fresh & Easy, will be judged on the same seven performance measures.
Remuneration packages awarded at the firm’s AGM last year caused some controversy, in particular that of Fresh & Easy CEO Tim Mason who received around £7 million despite his operation still not making a profit.
Tesco Chairman David Reid said: “Over the past year we have consulted shareholders for their views on how we reward executive directors.
“We have designed a new structure which is simpler and more collegiate, with clear strategic financial targets, delivering broadly the same levels of remuneration as before but in a better way and more aligned with the interests of our shareholders.”
Share options are to be ended but the balance of rewards for executive directors is to be weighted more towards shares, with the executive shareholding guideline raised from one times base salary to four times base salary for the CEO and three times for other execs.
Tesco also announced its biggest ever shares payout to staff as part of its annual report, with over 225,000 colleagues across the UK receiving a share of a £110 million bonus pot.
Reid added: “We will apply the same performance measures through the business to the top 500 Tesco managers, ensuring that shareholders’ interests are embedded throughout the leadership of our business.”