David Prosser: Tesco offers hope to rebel shareholders everywhere else


Outlook For those who regard the scale of the rewards paid to its executives as excessive, Tesco's insistence that "every little helps" is not likely to play any better for yesterday's revamp of its remuneration policy. This, after all, is a company that handed even its lowest-paid director more than £1.7m last year.

Still, for those who worry more about the structure of pay than matters of quantum – probably most of the 47 per cent of shareholders who refused to back its remuneration report last year – the reforms the grocer is making will be welcome.

Essentially, they are an attempt to more closely align executive pay with the long-term performance of the company. Shifting the balance away from basic pay in favour of rewards linked to metrics such as return on capital employed is the right way to incentivise senior managers. The new scheme is also more transparent than the hotch-potch of arrangements it replaces.

There are a couple of quibbles. Tesco is seeking to raise the size of the bonus it is able to pay its chief executive, despite the substantial incentives already available. And while the abandonment of the link between the pay of Tim Mason, Tesco's man in the US, and the grocer's performance there is partly a recognition of investors' disquiet about what Mr Mason has been paid in the past, there is surely some merit in having an explicit relationship between the results achieved by what is a struggling division and the rewards offered to the man who runs it.

Still, broadly speaking, Tesco deserves credit for responding positively to last year's revolt. It is also worth pointing out that Tesco has a good record on sharing the spoils with rank and file staff – more than 200,000 staff were last week awarded shares in the company worth £110m. In that sense, Tesco differs from the companies criticised by Manifest, the governance specialist, this week for raising executive pay while failing to reward the rest of the workforce.

The broader point is that Tesco's overhaul is proof that it is not a waste of time for shareholders to make a fuss about pay, as some investors were beginning to think.

Contrast its willingness to listen to the attitude of, for example, the chairmen of Standard Life and Prudential, both of whom last week gave every impression of being supremely unconcerned about the concerns of their shareholders about executive pay.

Tesco may be in the minority so far in accepting criticism in this way, but its reaction will encourage investors to continue to be bolshy. Remuneration committees elsewhere will also take note. Everylittle really does help.

Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
News
A poster by Durham Constabulary
news
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine