Tesco, Britain’s biggest retailer, will seek recovery of the termination payment made to ousted Chief Executive Officer Philip Clarke, if gross misconduct is determined following the discovery of an accounting black hole.
Money paid to Laurie McIlwee, the former chief financial officer, will also be pursued in such circumstances, the grocery leader said in an annual report this morning.
Clarke was replaced as CEO in September just before the revelation of a £263m profit overstatement, receiving a £1.22m payoff in February. At the time, McIlwee was also handed around £1m. Tesco initially withheld the payments amid an internal review and hasn’t made any allegation of wrongdoing against either individual reports Bloomberg.
The annual report has revealed that that Clarke’s replacement, Dave Lewis was paid £4.1m in his first six months as CEO, including £3.3m in lieu of incentives due from previous employer Unilever. Alan Stewart, who joined as finance boss in September, received £2.3m through February, including £1.9m to make up for forfeited incentives from Marks & Spencer.
Tesco has shifted its bonus structure this year to prioritise sales growth over profit. Half of Lewis’s annual payout will be determined by sales growth and 30% is linked to trading profit. Last year, half of Clarke’s bonus was determined by earnings, with only 18% of the amount determined specifically by sales.
The payout can reach a maximum of 250 percent of Lewis’s base salary, Tesco said.
“To deliver turnaround performance, top-line revenue growth is fundamental and will be the foundation to ensuring sustainable levels of profit in the future,” it added.