Tesco has come under pressure by its shareholders to stop chief executive Philip Clarke potentially walking away with £21 million, after he announced he was quitting in October following the supermarket suffering its worst sales in four decades.
“People get paid for delivery, not for not delivering," one major Tesco investor complained, according to the Telegraph.
Clarke is estimated to be getting a leaving package worth up to £10 million, being paid his £1.17 million-a-year salary for a six month "transition" period and a further year's worth of salary on departure.
Accounting for the amount Clarke has accumulated in pensions and shares over 40 years of service at the supermarket giant, the retail boss could potentially walk away with £21 million altogether.
Clarke will be replaced by Unilever executive Dave Lewis. Lewis will get a basic salary of £1.25 million and standard benefits, receiving a further £525,000 in lieu of his current year cash bonus from Unilever, Tesco said in a statement.
Six Reasons Tesco's Dominance May Be Finished
Tesco can't shrug off its poor performance(01 of06)
Open Image ModalClarke blamed the dip in sales on cutting prices, moving away from vouchers and the disruption from refurbishing a large number of stores.However, Bernstein Research's Bruno Monteyne estimates that if you took out such costs, their like-for-like sales would still have dipped by 2%.
Tesco is trying too hard to appeal to everyone (02 of06)
Open Image ModalDiscount retailers like Asda specialise in offering good deals, while fancy supermarkets like Waitrose are without equal at providing luxury. So Tesco is trying to be a mix of everything, other customers are lured away by more specialised rivals.
Others are doing what Tesco is trying, but better(03 of06)
Open Image ModalTesco "has been increasing prices way too fast over the last few years to keep up earnings growth," Monteyne points out.As a result, compared to discount retailers like Asda, Tesco is at least 4% more expensive for shoppers.
1 million fewer customers are visiting a week(04 of06)
Open Image ModalThe proof that Tesco is having some issues comes in the footfall, as the chain seems to have lost more than 1 million customer visits a week, worth £25 million in sales.
Tesco has never done this badly (05 of06)
Open Image ModalClarke, who has worked for 40 years at Tesco, admitted: “I have never seen a quarter’s like-for-like sales like this before, that I can remember."Monteyne told Radio 5 Live the results were "the worst in their history."
Even Tesco's boss isn't confident (06 of06)
Open Image Modal“I see every day the improvements that are coming in the business, but I’m not making any promises about sales improving in the next few quarters," Clarke warned today. Meanwhile, other analysts like Julie Palmer at Begbies Traynor think Clarke "doesn't seem to have a clear turnaround strategy". He'll have to work hard to prove them wrong.