Tesco chief gets 15% raise as shares fall 25%

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The Independent Online

The chief executive of Tesco, Britain's biggest grocer, pocketed a 15 per cent rise in his total pay packet last year, despite a 25 per cent slide in the company's share price.

The chief executive of Tesco, Britain's biggest grocer, pocketed a 15 per cent rise in his total pay packet last year, despite a 25 per cent slide in the company's share price.

Sir Terry Leahy saw his total salary and bonus-related perks increase to £2.83m from £2.46m the previous year. This came on top of a 53 per cent rise in his remuneration package one year earlier.

News of the rise, which is revealed today in Tesco's annual report, is certain to fuel the antipathy towards corporate largesse in Britain's boardrooms. Shareholders are aiming to force them to scale down exuberant pay awards made amid one of the worst bear markets for decades.

GlaxoSmithKline, the UK's biggest drugs maker, over the weekend became the latest company to bow to investor pressure by signalling that it would overhaul its board of directors as part of an independent review of its remuneration policies.

The award to Sir Terry was part of £148m paid out to Tesco's 220,000 staff through incentive bonuses and share schemes. This included £10m for the company's board and £32m for its 3,000 executives.

The report shows that Sir Terry's basic salary was raised to £916,000 in the year to 22 February from £842,000 in 2002. His "additional benefits" nearly trebled to £65,000 in the same period. The bulk of his package was a "long-term performance-related" bonus of £1.8m, which was based on earnings per share (EPS) growth. The company's underlying EPS was 14.1p last year, up from 12.33p the year earlier. Its pre-tax profits grew 15 per cent to £1.4bn.

Tesco said an independent remuneration committee had approved the payouts, which were linked to "challenging" long-term performance targets.

The report also showed that David Reid, the executive deputy chairman, saw the transfer value of his pension rise to £5.2m from £4.7m. The value of Sir Terry's pension pot, which measure the total amount he has accumulated towards his retirement benefits, fell to £2.5m from £3.2m the previous year.

Glaxo's chairman, Sir Christopher Hogg, will try to defuse a looming shareholder rebellion at the group's annual meeting next Monday. Sir Christopher is anxious to avoid a damaging vote against the group's remuneration policy and the re-election of executive directors at what is expected to be one of the year's tensest AGMs.

Reports suggested the potential changes to the drug giant's board are thought to target its remuneration committee, which was forced to abandon a plan last year to double the annual pay and bonus package for Jean-Pierre Garnier, the chief executive, to £11m. Investor furore centres on JP Garnier's £23m severance package, thanks to a two-year contract that contravenes UK corporate governance rules.

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