By Marcus Leach
Tesco, in a move to avoid a repeat of last year's shareholder revolt, have revamped their pay policy for top executives.
Last year almost half of Tesco's shareholders failed to back the supermarket's renumeration report, something they are looking to avoid this year.
The 2011 annual report, published on Tuesday, revealed that the incentive scheme previously enjoyed by US boss Tim Mason will be scrapped, after his pay became one of the biggest areas of criticism last year.
US investors said Mason's pay was too much given the losses reported by Tesco's American start-up store, Fresh & Easy.
"In light of the renewed focus on a collegiate approach to remuneration, together with Mr Mason's appointment to the roles of deputy CEO and chief marketing officer, it has been agreed that Mr Mason will no longer be eligible for awards under the US annual or long-term incentive programmes. Mr Mason will therefore no longer participate in the US LTIP [long-term incentive plan] and the two million shares granted to him in 2007 will lapse," the report stated.
However, despite these changes chief executive Phillip Clarke, who has only been in the position for three months, will have the ability to earn an annual long-term bonus of up to 275% of his £1.1m salary, and a further 250% through a short-term bonus.
The report did go on to say that Tesco will reward their chief executive with even higher bonuses in exceptional circumstances.
"To ensure that we have sufficient headroom to grant awards in exceptional circumstances, in line with usual practice, we are seeking shareholder approval to increase the maximum award opportunity under the PSP [performance share plan] to 350% of base salary," the report said.