Substantial bloc of Tesco shareholders rebels at annual meeting against pay for US manager

Tesco shareholder bloc revolts over US exec pay

LONDON — A substantial bloc of Tesco PLC shareholders, urged on by U.S. union activists, rebelled against the pay of the retail company’s senior executive in the United States at an annual meeting on Friday.

Thirty-eight percent of shareholders voted against Tesco’s remuneration report, which sets out pay for senior executives and directors of the world’s third-largest retailer.

Criticism was directed at the 4.3 million pounds ($6.55 million) compensation package for Tim Mason, president and chief executive of Tesco’s Fresh & Easy supermarket venture in the United States.

That was half a million pounds better than the previous year, although Fresh & Easy has yet to turn a profit since being launched in 2007.

CtW Investment Group, which works with U.S. union pension funds, had called for a vote against the remuneration report.

“Tesco shareholders are troubled by the Tesco board’s apparent willingness to modify performance targets to award pay for failure,” CtW’s Executive Director William Patterson said last month.

“When the Fresh & Easy franchise has consistently failed to meet its established benchmarks there has to be an accounting. Particularly when there are outstanding questions regarding the board Remuneration Committee’s independence from management, the excessive compensation granted to Tim Mason despite such obvious performance failures is an embarrassment and should be rejected by shareholders.”

As the rebels couldn’t muster a majority, the pay report was approved.

Tesco chairman David Reid said it was important to provide strong incentives to develop Fresh & Easy.

“In almost every country, you incur losses in the first three years. This is nothing unusual,” said Reid, who asserted that losses had peaked.