Tesco suffers hefty protest vote over share options

More than 40 per cent of investors refused to back Tesco's proposed changes to its share option scheme at the grocer's annual meeting in Glasgow yesterday.

The resolution was passed with 54.9 per cent of votes to 45.1 per cent, including abstentions, but the rebellion is the latest in a series by UK shareholders over executive reward policies.

Riskmetrics, the investor advisory service, had tabled the resolution against the change to the share option scheme that extends to three years from one year the period during which retiring executives or store managers can exercise the options. A spokesman for the Association of British Insurers said: "Other companies considering such arrangements should take note of this strong signal from shareholders."

Lucy Neville-Rolfe, the grocer's corporate and legal affairs director, said: "Because of the volatility of the markets, if they are retiring, or retiring for ill-health reasons – or even if there is redundancy – it means they lose out in the current market because they only have one year to exercise the options."

The rebellion over its share option scheme is the latest by UK shareholders over what they perceive to be excessive rewards schemes, including protests at the AGMs of the oil giant Royal Dutch Shell and the advertising company WPP. However, 92.7 per cent of Tesco's shareholders voted in favour of its remuneration report.

Furthermore, 88.79 per cent of shareholders rejected a resolution tabled by Unite, the trade union, calling on Tesco to improve the treatment of employees, notably the pay of agency workers, primarily migrants, at its UK and Irish meat suppliers.

Tesco said: "We apply – and audit against – robust standards for how all workers should be treated – regardless of their employment status or nationality. Unite should not be making unfounded allegations against responsible businesses or suggesting that Tesco have walked away from cross industry endeavour, which is not the case."