The chief executive of Britain’s largest supermarket saw his bonus slashed by £600,000 last year, despite navigating Tesco to its first year of sales growth since 2010.
Dave Lewis received £4.15 million for 2016/17 compared to £4.63 million a year prior.
According to the retailer’s annual report released today, the 10 per cent decline in Lewis’ wages is due to a cut in his bonus from £3 million to £2.4 million.
This comes on top of his unchanged annual salary of £1.25 million.
The decision fell to Tesco’s remuneration committee who stated that the level of bonus remuneration awarded to the chief executive was based on his performance in meeting “stretching targets” set for the year.
His £2.4 million reward is reportedly equivalent to 75.6 per cent of his potential maximum.
“Tesco has had a year of strong progress, delivering against the three turnaround priorities of improving competitiveness in the UK, a more secure balance sheet and rebuilding trust, which were set in 2014,” chair of the committee, Deanna Oppenheimer, said.
“A stable platform has been established and a strong performance delivered in spite of significant external challenges, which made 2016/17 another challenging year for retailers.”
This news comes amid calls from prominent lobby group the Institute of Directors for the newly-elected government in June to introduce legislation which stops senior executives pay checks skyrocketing.
Companies like Sports Direct and BHS have ignited the debate over corporate governance in the UK, with excessive executive pay taking centre stage.
Chairman of the Business, Energy and Industrial Strategy Committee (BEIS) Iain Wright said earlier this year: “Executive pay has been ratcheted up so high that it is impossible to see a credible link between remuneration and performance.”
It was also revealed this morning that Morrisons chief executive David Potts would receive a potential pay packet of £5.3 million through a long-term incentive plan (LTIP) of up to 300 per cent of his base salary.
Both Potts and Lewis have managed to guide their respective companies back into profitable territory in recent years, following the shakeup in the market from discounters Aldi and Lidl.