Tesco boss takes 10% pay cut despite growth

Dave Lewis nets €4.8m as retailer reports first full-year sales growth for seven years

Tesco CEO Dave Lewis says he has now stabilised the business following a period when customers were defecting to discount operators Aldi and Lidl. Photograph: Dominic Lipinski/PA

Tesco CEO Dave Lewis says he has now stabilised the business following a period when customers were defecting to discount operators Aldi and Lidl. Photograph: Dominic Lipinski/PA

 

Tesco boss Dave Lewis took a 10 per cent pay cut last year despite overseeing the retailer’s first full-year sales growth for seven years.

Mr Lewis received £4.1 million (€4.8 million) last year, including a £2.4 million (€2.8 million) bonus for delivering above-target sales growth and operating profit at the grocery chain.

But his bonus shrunk from the £3 million (€3.5 million) awarded in 2015, and the supermarket chief fell short of “stretch targets” that could have seen him take home another £1 million (€1.1 million) last year.

Britain’s biggest supermarket group has drawn criticism from investors for its proposed merger with Booker, a food wholesaler. The group is seeking to move into the growing restaurant supply market even as it repairs the damage done by a decade in which analysts say the company paid too little attention to its stores.

‘Stabilised’ business

Mr Lewis says he has now “stabilised” the business following a period when customers were defecting to discount operators Aldi and Lidl, and has vowed that the group would earn between 3.5p and 4p of operating profit for every £1 customers spend by 2020.

He has also begun to draw a line under the legal fallout from a 2014 accounting controversy that led to a £326 million (€384 million) profit restatement, and introduced a formula that combines lower prices with a more constructive approach to suppliers.

Mr Lewis has trumpeted a new range of meat and produce sold under bucolic-sounding brands such as Rosedene Farms. Tesco says most of its customers have made repeat purchases from the range, which are sold for roughly the same price as Aldi’s deeply discounted offerings, according to Bernstein Research. 

The grocery chain paid stamp duty and legal fees of £142,000 to help its chief executive buy a house nearer to its Hertfordshire headquarters, according to its annual report on Friday, where Mr Lewis moved the business shortly after joining in 2014.

The supermarket group also paid £9,000 towards the installation of “security measures to meet business standards”, bringing its total outlay on such protection for Mr Lewis to £38,000 over three years.

– (Copyright The Financial Times Limited 2017)