City shock as John Allan beats Archie Norman to Tesco chair

Tesco has selected a former chairman of Dixons for its new chairman, passing over favourite Archie Norman (Getty Images)

The City was left stunned last night as Archie Norman, the ITV chairman, was passed over for the vacant chairman position at Tesco in favour of John Allan, the former chairman of Dixons.

Following the announcement, made after the stock market closed, one top 10 Tesco shareholder told The Independent he felt the decision was “wrong” and that Mr Allan lacked the grocery retail experience needed to lead the company’s turnaround.

Other top 10 shareholders had also called for Mr Norman to take the role and sources suggested the former Asda boss had been left furious by the decision.

Patrick Cescau, Tesco’s senior independent director who conducted the search, said last night: “Following a deep and thorough process run by a committee of independent non-executive directors, the board unanimously agreed that John Allan was the right candidate to chair Tesco at this important time.”

He will replace Sir Richard Broadbent, who was forced out following the discovery of a huge £263m accounting “black hole”.

The scandal is now under investigation by the Serious Fraud Office, the Financial Reporting Council and the Groceries Code Adjudicator, although Dave Lewis, the new chief executive, failed in his attempts to withhold about £2m in pay-offs to Phil Clarke, the supermarket’s ousted boss, and Laurie McIlwee, the former finance director, during the investigations.

Mr Allan, who will be required to oversee the turnaround, said: “I’m very pleased to be taking on this role at such a critical moment for the business and look forward to working with the new executive team and the board.”

Sources close to Tesco said Mr Allan was chosen because he fitted the criteria the supermarket needed, including retail experience with a FTSE 100 company, knowledge of an international business and being the best “cultural fit” with the UK’s biggest supermarket.

He currently chairs the housebuilder Barratt Developments, is co-deputy chairman of the electricals retailer Dixons Carphone and sits on the board of Royal Mail. He will be paid an annual £650,000 salary, more than Sir Richard’s £625,000.

But one major shareholder pointed out that Mr Allan does not have the same direct grocery experience as Mr Norman, who turned around Asda in the 1990s before it was bought by Walmart, and sits on the board of Australia’s biggest grocer, Coles.