Sir Ian MacLaurin, the chairman of Tesco, became one of the highest- paid men on the high street last year with total remuneration of £1.5m. Sir Ian saw his pay rise by 27.5 per cent last year to £1.01m and cashed in share options worth £474,000.
The main board members together realised more than £1.6m in share options during the year. David Malpas, managing director, and David Reid, finance director, cashed in options worth £388,000 and £359,000 respectively.
Although Sir Ian's salary only rose from £635,000 to £678,000 last year, his total pay was boosted by short- and long-term bonuses, which more than doubled to £334,000. Sir Ian's pay first broke through the controversial £1m barrier in 1992.
The return of the seven-figure pay packet for top retailers shows that in spite of the trauma being experienced by many on the high street, pay at the top remains high. Sir Geoff Mulcahy, recently demoted from chairman to chief executive at the troubled Kingfisher group, has seen his pay fall this year but still earns almost £1m.
Sir Alistair Grant, chairman of the Argyll group which recently announced the closure of 17 of its Safeway stores, also earned close to seven figures.
David Sainsbury took home only £350,000 last year, but his pay is augmented by a multi-million-pound dividend cheque each year as he owns a sizeable chunk of the supermarket chain.
Sir Ian's 27.5 per cent pay increase also dwarfs the 2.6 per cent rise received by Tesco shop assistants. Shop workers outside London earn £4.12 an hour giving them a weekly wage of £150. Tesco says it runs a share option scheme for staff which would have given the average shop assistant shares worth £351 during the year.
Justifying the pay increase yesterday Tesco said: "We had a very good year last year and it was good for everyone. There's only one person who is chairman and he has to take the responsibility and make the decisions."
Tesco calculates its bonuses using a mixture of earnings per share calculations and other strategic goals which it declines to specify.
Tesco has had a good 18 months during which the company has toppled Sainsbury from the perch as the nation's largest grocer. It has also outperformed the stock marketTesco's recent like-for-like sales have been rising at 7 per cent compared with only 2.3 per cent achieved by Sainsbury's.
In March Tesco announced results showing profits up by 12.7 per cent to £595m and a dividend up by 11 per cent. However, the longer-term record is less impressive making Sir Ian's long-term bonus look harder to understand. Between 1991 and 1994 return on capital employed fell each year before rising again in 1995.