Philip Clarke will walk away from Tesco with a fortune worth up to £9.6m and “enormous relief” after facing several months of criticism over his position at the top of the UK’s biggest supermarket.
His removal comes as the supermarket admitted next year’s profits are set to plummet by as much as £600m according to analysts.
Mr Clarke added he had not been given an option of the timing of yesterday’s decision to fall on his sword and accepted the board’s call for his resignation.
He will be replaced by Dave Lewis, Unilever’s UK & Ireland president, and sees his 40 year career with Tesco come to a crashing end with a final humiliating profit warning.
Chairman Sir Richard Broadbent, who would only say profits are expected to be “somewhat below expectations”, insisted he received no pressure from institutional investors to sack Mr Clarke and that plans for a succession had been in place for some time.
Video: Clarke 'didn't move fast enough'
He said: “Having guided Tesco through a substantial re-positioning in challenging markets, Philip Clarke agreed with the board that this is the appropriate moment to hand over to a new leader with fresh perspectives and a new profile.”
The City appeared to agree with his decision to show Mr Clarke the door, with shares closing up 1.28 per cent at 288.65p despite profit warnings usually sending shares down.
However, Mr Clarke told the BBC: “[The date] is not one of my choosing but it is a choice I would willingly make.”
Mr Clarke will leave officially in October with a £1.8m payoff and a personal shareholding worth £5.2m, and will be available in an advisory role until January. He will be paid 12 months in lieu of notice and receive his £1.2m salary until then. Investor group Manifest said he could get a total of £9.6m.
Last month he received the full backing of Sir Richard at the company’s annual general meeting, when the chairman urged shareholders to give the company more time to turn around its recent misfortunes.
Mr Clarke was voted back onto the board by shareholders with an impressive 98.86 per cent in favour. By comparison, under-pressure Marks & Spencer chief executive Marc Bolland got 96 per cent approval.
Following yesterday’s announcement analysts were left scratching their heads over what to make of the profit warning. Clive Black at Shore Capital suggested earnings could fall by between 5 and 10 per cent, while he also predicted full year pretax profits will be down 20 per cent from £3.05bn to £2.45bn.
Despite a stellar career that saw him climb from shopfloor to boardroom, Mr Clarke has suffered since taking over the top job from Sir Terry Leahy.
He issued Tesco’s first profit warning for 20 years in 2012 and struggled with overseas ventures in the US and Japan. Since then he was forced to write down £1.2bn against the US Fresh & Easy exit and £800m against plans for new stores in the UK as he ended the so-called space race.
More recently, Tesco has lost market share to discounters Aldi and Lidl and belatedly, for Mr Clarke, launched a price war to cut the cost of everyday essentials.