Tesco boss Dave Lewis has been offered share and bonus options worth a maximum of over £6.5m a year for turning around the supermarket giant, its annual report reveals today.
The former Unilever boss, who received a £4m “golden hello” when he was parachuted in to take over the struggling retailer last September, did not receive any annual bonus this year, as Tesco cut bonus payments for its management due to poor performance.
The report revealed that Lewis could receive up to 250% of his £1.25m annual salary in performance related pay, including 50% in cash and the rest in shares, plus up to a further 275% in shares based on the successful upturn in the retailer’s share value.
Tesco’s chief financial officer, Alan Stewart, who is on a salary of £750,000 a year, has also been offered a lucrative annual bonus and performance share plan worth up to £3.5m a year.
The management’s annual bonuses will be divided up into categories, with 50% dependent on sales performance, 30% on Tesco’s profit and 20% on individual targets.
The report said the performance share plan for the Tesco leadership would be based on “Delivery of significant value to shareholders through share price and dividend performance and returning the business to be one that generates sustainable, quality cash flow.”
In the report Lewis said it was a “huge honour” to lead Tesco.
“It’s a business I had worked with for 27 years. As a supplier, I always had enormous admiration for Tesco – its people, passion, and expertise,” he said. “So when I was invited to come in and lead this great organisation, it was an opportunity not to be missed. “
Despite Tesco’s record annual losses of £6.4bn for 2014/15, Lewis said his turnaround plans were beginning to see the “green shoots of recovery”. “By focusing on the fundamentals of availability, service and targeted price reductions over the last six months, we have seen a steady increase in footfall, transactions and, most significantly, volumes,” he said.
“Our task now is to build on this and nourish these small green shoots of recovery. We need to continue to listen to our customers and they will guide us. Tesco became a great business by putting our customers at the heart of everything we do and we shall do that again. “