Blog: Lots of noise, but no change at Tesco
Petah Marian | 5 July 2010
After last week's brouhaha around around Tesco's executive remuneration scheme, shareholders still approved its management pay plans, with over 62% endorsing the programme.
Despite the scheme being approved, critical investment Group CtW described the 38% vote against as a "stinging rebuke to board over pay".
This comes as Citi analysts criticised Tesco's accounting practices, arguing that if it had applied more conservative policies across its revenue recognition, depreciation, the allocation of property profit, capitalised interest expense and pension accounting, it would have reduced its 2009/10 underlying profit by GBP800m (US$1.2bn)
"The onus is now on the board not only to restore the link between pay and US performance for Mr. Mason, but also to address the underlying concerns with Fresh & Easy's future viability," Michael Garland, director of value strategies for the CtW Investment Group, said. "As an immediate first step, the board needs to disclose metrics and targets that will allow shareholders to evaluate the performance of Fresh and Easy and its executive management going forward."
Regardless of the retailer's future in the US (and for the record, I do think it has a future there), Tesco seems to have forgotten that it needs to remain accountable to its shareholders.
With Sir Terry Leahy's imminent retirement, and all of the executive restructuring taking place right now, we can only hope this will change.
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