The boss of Tesco, Dave Lewis, saw his pay package shrink last year despite leading the company to its first year of sales growth in seven years.
The chief executive of Britain’s biggest supermarket chain received £4.15m last year, 10% less than his £4.63m package a year earlier.
Tesco’s annual report, published on Friday, showed the fall was driven by a smaller bonus payout of £2.4m for 2016-17, compared with £3m in 2015-16. Lewis’s annual salary remained at £1.25m, and stays the same for the year ahead.
The retailer’s remuneration committee, which decides how much top executives should be paid, said the level of bonus paid to Lewis was based on how far he had met the “stretching” targets set for the year. The £2.4m bonus was equivalent to 75.6% of his maximum annual bonus.
Deanna Oppenheimer, chair of the remuneration committee, said Tesco had performed well in a tough year for retailers: “Tesco has had a year of strong progress, delivering against the three turnaround priorities of improving competitiveness in the UK, a more secure balance sheet and rebuilding trust, which were set in 2014.
“A stable platform has been established and a strong performance delivered in spite of significant external challenges, which made 2016-17 another challenging year for retailers.”
Tesco’s finance director, Alan Stewart, was paid £2.24m last year, 14% less than his £2.6m pay package a year earlier. His salary was flat at 750,000 but his bonus fell to £1.25m from £1.6m in 2015-16.
The annual report also revealed that Tesco paid £142,000 in stamp duty and legal fees to help Lewis buy a house closer to the company’s headquarters in Hertfordshire.
For much of the past decade Tesco has been losing customers to discount grocers Aldi and Lidl, but in the 112 months to the end of February, it managed its first full year of sales growth since 2009-10, with like-for-like sale up by 0.9%. Lewis was parachuted in to lead a turnaround of the supermarket giant in September 2014.
Speaking as the annual report was published, Lewis said Tesco had made “very strong progress” but there was still a lot of work to do.
“Over the last two and a half years we’ve done a lot at Tesco, and I’m personally very pleased with the progress that the team and the business is making. But we’re also very clear that there’s much much more that we want and can do to improve the business yet further.”
Supermarkets including Tesco are braced for a choppy year ahead, as the sharp fall in the value of the pound since the Brexit vote pushes up the price of imported foods and ingredients. Retailers will have to judge to what extent they are able to pass on the price rises to customers without damaging business.
Daniel Ekstein, food retail analyst at UBS, said Tesco shoppers were seeing the lowest price inflation among its competitors. Inflation at the UK’s major supermarkets was 1% year-on-year in April, according to UBS’s regular pricing monitor. Tesco’s basket of products tracked by UBS fell in price by 2.1%.
