Philip Clarke, CEO of the UK’s leading retailer Tesco, has informed around 5,000 of the company’s store managers & executives that their annual bonuses will be slashed this year.
According to The Daily Mail a letter was sent to the managers explaining that poor performance across the group means that yearly bonuses are to be cut by more than 80 per cent on last year’s levels.
Last month the supermarket chain confirmed that UK profits had fallen by one per cent in the year ending February 25th 2012 after domestic sales dropped by 2.3 per cent on a like-for-like basis over the important Christmas period.
Last year managers & executives received 100 per cent of their bonus pot thanks to a strong full-year performance but this year employees are expected to receive just 16.9 per cent of the total available, equating to an average drop from around £12,000 each to between just £2,000 and £3,000.
In the letter to the store managers, Clarke said: “Last year was a difficult one despite delivering another record set of results.
“The group missed its profit targets and had a mixed performance across our six corporate objectives – we missed the threshold for UK return on capital employed and our UK like-for-like sales target.
“Following a review of our performance for 2011/12, the executive committee has approved an award of 16.9 per cent of your maximum bonus.”
Full details on pay awards will be revealed next week at the retailer’s AGM.