Tesco chief executive Ken Murphy saw his pay rise by more than £1m last year after the supermarket giant delivered stronger sales, profit growth and its highest market share in a decade.

Murphy received £10.8m in total pay for the year, up from the previous year, as Tesco continued to benefit from the weaker performance of rivals Asda and Morrisons.

The pay package included £1.51m in basic salary, a £3.4m annual bonus and a £5.7m long-term bonus, which included shares in the business.

Murphy’s basic pay is set to rise again this year, increasing by 3 per cent to £1.54m, according to Tesco’s annual report.

The UK’s largest supermarket now accounts for more than £1 in every £4 spent on groceries in Britain, with its market share rising to 28.1 per cent. That is up from 26.5 per cent in 2020 and marks its strongest position in a decade.

Tesco is targeting a 30 per cent market share, although that would remain below its peak of almost 32 per cent in 2007.

Murphy’s long-term bonus came in almost a quarter below the maximum possible after Tesco failed to meet its food waste reduction target. The supermarket had aimed to halve food waste by December but said an internal review found that some food it believed was being processed for animal feed was instead being sent to anaerobic digestion.

Tesco has cut food waste across its own operations by 24 per cent against a 2017 baseline and is still aiming for a 50 per cent reduction by 2030.

However, the grocer’s remuneration committee has now removed food waste from Murphy’s future long-term bonus targets and replaced it with a market share measure.

The Tesco boss received the full bonus available for carbon reduction measures, including the rollout of electric vehicles, and most of the reward linked to cashflow and earnings. He received only one percentage point out of a possible 8.3 for diversity, equity and inclusion targets.

Tesco posted an 8.5 per cent rise in profits to £2.4bn in the year to 28 February, while sales increased 4.3 per cent to £66.6bn.

Store and warehouse workers are also set to receive a bonus after the strong performance. Tesco staff will share £65m, equivalent to 1.25 per cent of pay, with a full-time employee receiving around £347 on average.

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