Newspaper article The Evening Standard (London, England)

Tesco Hit by New Shareholder Revolt over Pay for Executives

Newspaper article The Evening Standard (London, England)

Tesco Hit by New Shareholder Revolt over Pay for Executives

Article excerpt

Byline: Gideon Spanier

SHAREHOLDER anger over executive pay boiled over today when investors holding a hefty 42% of the stock refused to back Tesco's decision to make its share option plan even more generous.

While more than 57% of investors' votes backed the motion at the supermarket giant's annual general meeting in Glasgow, it was a major revolt. Just over 41% of votes were against while the remainder, fewer than 1%, abstained.

It is the latest in a run of shareholder protests against major companies. Sir Stuart Rose last month surrendered part of his bonus at Marks & Spencer after shareholders voiced concerns, while only this week Argos owner Home Retail Group suffered a big protest vote with 35.6% rebelling against its bonuses.

At Shell, a massive 59% of investors voted against its pay deals, while Barclays is also coming under pressure.

Riskmetrics, a shareholder advisory group, had urged investors to reject the Tesco proposal because it would let departing or retiring executives exercise their share options over a three-year period instead of the current oneyear period. Former Tesco executives could benefit significantly if the share price rose. Riskmetrics had complained Tesco's move was "not in line with best practice".

The Association of British Insurers was also concerned about the change. A spokesman said: "Shareholders have made clear their views. This is something the company needs to be mindful of and highlights the care remuneration committees have to exercise. Other companies considering such arrangements should take note of this strong signal."

Tesco's eight executive directors on the board hold 30.92 million share options, with chief executive Sir Terry Leahy having 12.59 million. Those shares could be worth [pounds sterling]44.2 million, but their value to Leahy depends on the exercise price he might pay. …

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