US/UK: Tesco under pressure over Fresh & Easy
Tesco shareholders are calling for US CEO Tim Mason's payment to be tied to performance
US investment group CtW has increased its pressure on Tesco before the retailer's AGM tomorrow (2 July), calling on incoming director Patrick Cescau to address investor concerns about "excessive pay" and the performance of its US division, Fresh & Easy.
The board's failure to link its US chief executive Tim Mason's pay to its US performance is expected to result in significant shareholder opposition to directors remuneration at the AGM.
CtW has already sought support from Tesco shareholders urging them to take a stand over executive pay at the group.
In an earlier letter to shareholders, CtW executive director William Patterson said: Tesco's shareholders are troubled by the Tesco board's apparent willingness to modify performance targets to award pay for failure."
Last year, chief executive Sir Terry Leahy received some GBP10m (US$14.93m) in pay and cheap or free shares. Mason received about GBP7m, making him the second-highest paid director.
CtW also voiced concerns over the company's move to acquire two suppliers to Fresh & Easy, accusing it of "effectively doubling down on a US venture whose viability is increasingly in question".
The letter said 2 Sisters and Wild Rocket Foods' decisions to exit the US market are the latest votes on the US venture's viability.
As the two companies established their US operations solely to supply Tesco, and are major suppliers for the chain globally, CTW said: "We can only assume these effective insiders saw the writing on the wall and concluded that Fresh & Easy was unlikely to achieve critical mass to be viable."
CtW is calling for increased transparency on Fresh & Easy's targets and performance after the division lost GBP165m last fiscal year, on the heels of a GBP140m loss in the previous year. This follows earlier projections that the banner would break even by the end of 2009.
Speaking at the publication of Tesco's annual results in April, finance director Laurie McIlwee said Fresh & Easy's losses were "flattening out".
Tesco is looking to open 50 Fresh & Easy stores this year.
The week kicked-off with the news that the purchase of French cheese maker Entremont Alliance by dairy co-operative Sodiaal had been approved....
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