By This Is Money Reporter
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Tesco is set to become the latest firm to face pressure from its shareholders over pay and performance when it holds its annual general meeting tomorrow.
The meeting in Cardiff comes amid anger over pay plans for bosses and calls for a review of the retail giant’s loss-making U.S. business.
Shareholder body Pirc has recommended that Tesco investors vote against the supermarket’s remuneration report, claiming the pay policy has the potential to be ‘wholly excessive’.
Checking out pay plans: Shareholders could hold Tesco pay deals under scrutiny
Tesco chief executive Philip Clarke waived his £372,000 bonus after the group issued its first profits warning in 20 years in January.
However he still took home a £1.6 million salary in the last financial year.
Investor anger over executive pay has swept across large firms, in what has been dubbed the ‘shareholder spring’.
Firms including marketing giant WPP have suffered significant shareholder rebellions over pay in recent months, while the spate of investor activism has claimed high profile scalps including Sly Bailey at Trinity Mirror, Aviva's Andrew Moss and AstraZeneca's David Brennan.
The contentious issue of Tesco’s embattled US arm Fresh Easy will also be in the spotlight at Tesco’s annual meeting.
Waiving his bonus: Tesco boss Philip Clarke
Change to Win (CtW), an investor group that works with U.S. union-sponsored pension funds â€" has demanded an urgent evaluation of the division.
It is calling for a committee of non-executive directors to review the future of Fresh Easy after five years of losses and is seeking shareholder backing for three amendments to the annual report and accounts.
Tesco has so far rebuffed CtW, saying its proposal was ‘union motivated and follows several years of union opposition in the US’.
A spokesman added: ‘CtW is not a shareholder, and does not speak for shareholders.
‘Fresh Easy continues to grow and innovate and is showing positive sales momentum.
‘We are confident the business is moving in the right direction.’
Tesco has had a difficult year so far after its shock profits warning in January, when it admitted it messed up its pricing strategy.
There has been little relief since t hen despite a £1 billion turnaround programme, with the group's recent sales figures lagging behind that of smaller rival Sainsbury's.
Tesco suffered a 1.5 per cent fall in underlying sales in the 13 weeks to May 26, while Sainsbury's recorded a 1.4 per cent underlying sales rise, although the latter included the Queen's Diamond Jubilee week.
Mr Clarke's decision earlier this year to forgo his bonus in the light of poor performance has failed to dampen the flames over pay.
Pirc said salaries were still ‘at the top end of the sector’, although it did praise the group for improving disclosure on pay.
The shareholder group also described Tesco's use of earnings per share and return on capital employed as targets for its main management incentive scheme as ‘commendable’.
Tesco said: ‘Pirc have recognised and commended many of the positive changes we have made.
‘We consulted a large number of our shareholders on our remuneration and have received positive feedback.’
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