Leahy leads Tesco staff in £220m bonus bonanza

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The Independent Online

Tesco's recent £2bn annual pre-tax profit has triggered windfalls of £220m for staff and directors at the grocery chain.

The company's annual report reveals 150,000 workers, from checkout staff and drivers to the board, will share the money through incentive bonuses and share schemes.

A typical shop floor worker enrolled in the company's save-as-you-earn and profit-share scheme could expect to earn bonuses of up to £4,000 from the payouts.

The board will share £12.8m, with Sir Terry Leahy, Tesco's chief executive, receiving a personal bonus of £2.08m made up of a £1.03m cash bonus plus £1.05m in shares under long and short-term performance-related share schemes. His basic pay was £1.04m, bringing his total pay for 2004 to £3.2m - a £217,000 increase on the year before.

Excluding share options, Sir Terry now has a stake in Tesco's ordinary shares worth £17.8m. He also has 4.7 million options, which were granted at various prices, to acquire further shares in the company.

Tesco's annual report showed that John Gildersleeve, Tesco's former commercial director who retired in March last year, cashed in share options worth £2.8m during the year. On retiring he was also allowed to keep a car worth £95,566.

The £220m payout to staff is thought to be the largest performance-based shares payout from a UK company. Tesco said it was in recognition of a year when profits grew more than 20 per cent, having opened 114 new stores employing an additional 11,000 people.

During the year, Tesco announced it was expanding into China, having already established its overseas business in markets such as Europe and Japan as an important source of growth in the future.

However, Tesco's expansion has caused concern. The company's large hypermarket formats are blamed for undermining local independent traders whose demise is reflected in the domination of national brands on the country's high streets.

David Reid, the Tesco chairman, said: "As always our success is down to the hard work and the skill of the whole Tesco team. They deliver for customers every day and have made Tesco a British success story at home and abroad, an achievement of which we should all be proud."

He added: "I am delighted that once again all staff are sharing in this success."

Over the past eight years Tesco has been transformed from one of the UK's grocery also-rans, trailing the likes of J Sainsbury and Marks & Spencer, into the country's leading supermarket chain. Its dominance is reflected in the basic pay of its chief executive. Sir Terry is paid nearly double the amount that Justin King, the chief executive of Sainsbury's, receives. Mr King's salary is £675,000.

Tesco is expanding fast in non-food areas such as clothes, music and electrical goods.