Tesco chiefs stand firm as investors rail at 'madness' during AGM
Chairman and chief executive go on the defensive
Saturday 28 June 2014
The Tesco chairman Sir Richard Broadbent came to the support of Philip Clarke, his embattled chief executive, yesterday despite a barrage of hostile questions from angry shareholders at the grocer's annual meeting.
Both men also publicly praised Sir Terry Leahy, even though the former chief executive recently said he was disappointed with the current performance, which several shareholders have accused him of creating.
Facing down investors at the supermarket's annual meeting, Sir Richard claimed that the former chief finance officer, Laurie McIlwee, was not pressured into leaving the company earlier this year and that he was open to the idea of introducing more retail experience to the board.
He told shareholders: "We, the board, are very aware that the company's share price performance has been poor over the last 12 months. But it is important that we do not flinch from the decisions needed to shape a competitive business for the future."
Despite his reassurances, the vast majority of questions were critical, with some shareholders calling for Mr Clarke to go, while others laid the blame at Sir Terry's feet.
One investor said: "You've just congratulated our previous directors. Good God, man, aren't you realising Sir Terry Leahy took this company and cost us £3bn with his failure in the US – and you want to congratulate him. Has the madness got that bad?"
But Sir Richard added: "I'm not going to talk about the past, but all I'm going to say is that when Sir Terry Leahy retired, he left this company as the leading retailer in the UK. I don't believe anyone living on this planet can get every individual thing right."
Other shareholders called for more board members with retail experience – something Sir Richard said he was considering – while Mr Clarke said: "Just because you don't see more than one retailer [on the board] doesn't mean that there are not more retailers involved in the debate and discussions the board have."
Despite the hostility, shareholders voted overwhelmingly for all the resolutions, including re-electing Mr Clarke to the board in a year when the shares have plummeted 15 per cent, hitting 10-year lows.
Sir Richard said Tesco was improving its stores and its website, launching more Harris + Hoole coffee shops and Giraffe restaurants in stores, and joining a price war while reducing promotions.
His public support for Mr Clarke will give the chief executive some breathing space at a time when many had thought he could not survive.
The chairman added that there would be more humility from the board when running the business, following accusations of arrogance, and that he wanted to engage customers more willingly.
He was also asked by 11-year-old Lucas Pinto whether he would introduce the living wage by the time he would be old enough to work for the supermarket. Sir Richard failed to commit to the proposal, although Mr Clarke promised campaigners that he would hold a meeting after receiving a petition on the issue.
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