Tesco chief executive turns down bonus as retailer loses market share

The chief executive was paid a basic salary of more than £1m last year and was awarded share options worth £2.7m during his first year in the job, according to the company’s annual report.

The world’s third-biggest retailer, which issued a shock profit warning in January, also said its top 5,000 managers would receive a reduced annual bonus representing 16.9 per cent of their maximum entitlement.

Executive directors will get 13.5 per cent of the maximum.

Tesco shares have lost almost a quarter of their value this year after the supermarket group warned it needed to invest around £1bn in its attempt to stem market share losses in Britain.

“I decided at the beginning of the year that I would decline my annual bonus for 2012,” Mr Clarke said in a statement.

“I wasn’t satisfied with the performance in the UK and I won’t take the bonus. I’m confident that we’re tackling the right issues.”

Mr Clarke, a former Tesco shelf stacker, would have been entitled to a payout of about £372,000 had he taken the 13.5 per cent being paid to other executive directors.

His decision comes amidst a round of high profile shareholder revolts over executive pay at companies like Barclays, Inmarsat and Prudential in a phenomenon dubbed the “shareholder spring”.

Investor resistance to big pay rises at underperforming firms has also led Aviva boss Andrew Moss, and Sly Bailey, head of newspaper group Trinity Mirror, to quit this month.

Richard Marwood, a fund manager at AXA Investment Managers, one of Tesco’s top 20 investors, welcomed Mr Clarke’s decision.

“I think Clarke’s move is laudable. It shows sensitivity to both the current investor mood on remuneration and the challenges facing Tesco,” he said.

Others, however, were concerned about the impact on morale among senior management, with some fund managers voicing fears it could lead to a brain drain at a difficult time for the group.