Every little helps Leahy to earn a £4m pay deal

Tesco boss reaps the rewards of his success as the UK's favourite supermarket forges ahead

Sir Terry Leahy, the chief executive of the supermarket giant Tesco, took home a bumper £4m pay package last year, including bonuses totalling a record £2.8m.

The package, up from the previous year's £3.2m, means Sir Terry is one of the best-paid chief executives in the FTSE 100. Details of his salary and bonus come just weeks after Tesco revealed record full-year profits of £2.25bn. The news is likely to fuel the controversy surrounding the retailer.

A backlash has started against the UK's number-one supermarket, despite Tesco reporting record growth in recent years, including a significant overseas expansion. Critics complain that the vast profits and bonuses come at a price, including the squeezing of suppliers, the undermining of independent retailers and the "cloning" of high streets.

The City also has concerns, warning that the supermarket's balance sheet is not used as efficiently as it could be, and that its share price is underperforming the sector. The Competition Commission recently announced it was probing the big four supermarket chains.

Tesco has appeared to hit back, however, by unveiling a series of "green" initiatives and promising to carry out various property deals and return cash to shareholders.

An insider at the chain pointed out that the bonus payments to Sir Terry and other directors were paid only if the business did well. The source added: "All staff share in the success of the company, with hundreds of millions of pounds shared through our Shares in Success and Save as You Earn schemes."

Richard Hyman, chairman of the retail consultancy Verdict, also defended the payout: "Is Sir Terry worth £4m? I don't have a problem with him being paid that. I'm sure the company could find someone who would do the job for a lot less, but I think he is good value for money."

Sir Terry was paid a basic salary of £1.096m in the last financial year, bringing his total package, with bonuses, to £3.979m.