Retail: Shareholder revolt over Tesco chief's pay

The UK's biggest supermarket narrowly avoided shareholder defeat at its annual meeting in London, with its directors' remuneration report voted against by 38 per cent of votes – not a long way off the critical 50 per cent threshold. Tesco faced a barrage of criticism from

shareholders over the pay packet of its US manager, with claims from one lobby group saying Tim Mason – the head of Tesco's loss-making US chain Fresh & Easy – was getting too much.

Mr Mason received 4.3m in the company's 2009/10 financial year, up from 3.8m a year earlier, despite a 165m loss at the fledgling US venture.

Tesco chairman David Reid said the chain would listen and engage with concerned investors, but defended Mr Mason's pay. He said: "This is a critical stage for the US business model – it's absolutely appropriate that the team receives not only the basic incentives, but the incentives for driving that business model."

Lobby group CtW Investment, which works on behalf of pensions funds linked to US unions, had led calls for shareholders to vote in protest at yesterday's annual meeting the last for chief executive Sir Terry Leahy before he steps down next March.

Another individual investor hit out at the "vast sums of money" paid to Mr Mason – whose re-election was rejected by five per cent of investor votes at the meeting.

Tesco's US arm launched at a difficult time, just before the recession struck but the group claims that sales performance has been good.

Mr Reid said: "In almost every country, you incur losses in the first three years."

He added that losses had now peaked at the US arm.