Tesco chief paid £5.22m after grocer's record year

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The Independent Online

Sir Terry Leahy, the chief executive of Tesco, pocketed increased total pay of £5.22m last year after Britain's biggest retailer delivered the largest profits in its 91-year history.

While the chief executive was the highest paid, Tesco's executive management team shared pay and bonuses of £24m, including £4.27m for Tim Mason, the chief executive of its US operation Fresh & Easy.

Sir Terry, who has been at Tesco for 31 years and its chief executive since 1997, took home a salary of £1.4m, as well as "performance-related emoluments" of £3.7m and benefits of £115,000 for the year to 27 February. This compared to total pay of £5.1m a year ago, when he took a £370,000 cut to his pay and bonus package after Fresh & Easy failed to hit certain performance targets.

Still, the Tesco boss's pay this year is dwarfed by that of the FTSE 350's best-paid chief executive, Bart Becht, of the consumer goods company Reckitt Benckiser. Mr Becht pocketed £92.6m in 2009 after he realised share options accumulated over the previous decade.

Tesco, which has operations in 14 countries, including the UK, delivered record annual underlying profits up 10.1 per cent at £3.4bn, on sales up 6.8 per cent at £62.54bn over.

In the UK, which accounts for 70 per cent of group trading profits, the retailer's sales growth had trailed behind its rivals Asda, Morrisons and Sainsbury's, but it fought back with a £550m investment in its Clubcard loyalty scheme.

Under his long-term bonus package, Sir Terry is entitled to 50 per cent of his salary in deferred shares if he hits stretching performance targets specific to Fresh & Easy, which has nearly 150 branches. Tesco said that Sir Terry was awarded 65 per cent of the potential maximum of that part of his annual bonus in shares in 2009-10.

Last year, Tesco made a £165m loss at its US business, although Sir Terry said in April that losses had peaked at Fresh & Easy, which has been hit by the downturn in the economies of California, Arizona and Nevada.

Yesterday, a spokesman for Tesco said: "Fresh & Easy is making good progress and feedback has improved since Tim Mason and his team made changes to the stores and ranges, and as economic conditions improve we will open new stores. The business needs scale to be profitable."

Sir Terry holds 7.8 million shares in Tesco worth £32.2m at current rates. He also has 10.6 million share options. In addition, during his long career at Tesco, Sir Terry has built up a pension fund currently worth £15.9m.

Details of Sir Terry's remuneration came as the world's third-largest grocer by sales revealed that 216,000 of its employees in the UK, including checkout staff and van drivers, would benefit from a £105m bonus pot under its "Shares in Success" scheme.

To be eligible, staff must have been employed by Tesco for more than a year. More than 75,000 staff, who have held shares in the scheme since 2005, yesterday became eligible to sell £39m worth of shares.