Tesco chief's pay rises 13 per cent to pounds 901,000

TERRY LEAHY, the 43-year-old chief executive of Tesco, received a pay rise at four times the rate of inflation in the year to April, boosting his remuneration package from pounds 798,000 to pounds 901,000 for the year.

The 12.9 per cent rise in value of Mr Leahy's pay package significantly outstripped the increase in Tesco's earnings per share, which rose by less than 8 per cent. The package included profit sharing of pounds 8,000, a short-term incentive of pounds 184,000, a long-term incentive worth pounds 128,000, and other benefits of pounds 16,000.

Mr Leahy, who became chief executive in February 1997, was closely followed by David Reid, the 52-year-old deputy chairman, whose total benefits package was pounds 836,000, up 12.5 per cent.

John Gildersleeve, commercial and trading director saw his package boosted from pounds 709,000 to pounds 782,000, while Michael Wemms, retail director, enjoyed an 11 per cent rise to pounds 658,000.

In spite of the size of the benefit packages, the pay rises are unlikely to prove controversial with shareholders. Tesco, already the leading supermarket retailer in the UK, succeeded in growing its pre-tax profits by 7.8 per cent to pounds 881m over the year.

The group saw its share of the supermarket sector grow from 15.2 per cent to 15.8 per cent and invested pounds 600m to improve existing stores. One analyst said: "The pay is not excessive given what Tesco's been able to do, in market conditions that weren't always easy."

Tesco executives were also rewarded with share options. Mr Leahy was granted 126,832 options during the year and now owns more than 2.4 million options. Tim Mason, Tesco's 41-year-old marketing director, was granted 468,287 options during the year. He exercised 729,357, rerealising pounds 594,000.