Call for rebellion over Tesco pay

The latest scheme could see chief executive Philip Clarke pick up nearly £7m in pay and bonuses this year if the company meets all its targets.

PIRC, which advises big hitting pension funds and asset managers, recommended that shareholders vote down the plans at its annual meeting because the targets for rewards are not challenging enough and combined remuneration is excessive.

Tesco’s annual meeting last year saw nearly 40 per cent of shareholders rebel against its plans for executive pay.

In a bid to appease shareholders ahead of this year’s meeting, on July 1, it last month amended its remuneration report, scrapping a controversial bonus scheme for Tim Mason, the head of its loss-making US business.

The plans will see Tesco’s current four long-term incentive plans merged into one single plan with bonuses paid out if targets are met on earnings per share and return on capital employed.

Under the scheme, Mr Clarke, who started his job in March, can earn an annual long-term bonus of up to 275 per cent of his £1.1m salary and a further 250 per cent through a short-term bonus.

But PIRC has opposed its report despite the changes.

In particular, it objects to Tesco’s plans to include property sales in its performance measures for long-term incentive plans, which it says are not appropriate because they are not sustainable.