May 22 (Bloomberg) -- Tesco Plc Chief Executive Officer Philip Clarke declined a bonus of about 372,000 pounds ($587,000) amid slumping earnings at the biggest British grocer.
The executive’s total pay declined 49 percent to 1.2 million pounds in fiscal 2012, the Cheshunt, England-based grocer said in the annual report posted on its website today.
“I decided at the beginning of the year that I would decline my annual bonus for 2012,” Clarke, who took over as CEO in March 2011, said in a statement. “I wasn’t satisfied with the performance in the U.K. and I won’t take the bonus. I’m confident that we’re tackling the right issues and building a better Tesco for customers, colleagues, shareholders.”
Tesco said in January there will be “minimal” growth in earnings in the current fiscal year after its Big Price Drop campaign failed to win shoppers and its leading share of the U.K. grocery market fell to a seven-year low. The retailer’s share was 30.8 percent in the 12 weeks ended May 13, rebounding for a third month, researcher Kantar Worldpanel said today, as Tesco embarks on a program to invest 1 billion pounds in store refurbishments, additional staff and improved products.
“It’s a thoroughly laudable thing to do,” Bryan Roberts, an analyst at Kantar Retail in London, said of Clarke’s decision. “One suspects that shareholders and employees may have raised an eyebrow if he had accepted it. On his watch, the company has seriously underperformed the market, but a lot of the measures he’s put in place will see the business recover.”
Tesco shares have declined 23 percent this year, cutting the company’s market value to about 25 billion pounds. The stock was 0.3 percent down at 310.15 pence as of 3:52 p.m. in London.
Clarke’s contract also says that termination payments in lieu of notice are limited to salary and benefits only, the annual report showed. That was a response to shareholders’ reactions to the inclusion of bonuses in directors’ termination agreements, Tesco said.
Clarke follows Lloyds Banking Group Plc CEO Antonio Horta-Osorio in declining a bonus. Horta-Osorio said in January he was turning down his 2011 bonus to reflect the London-based bank’s performance and a nine-week absence last year.
Shareholders of companies including Barclays Plc, Aviva Plc, Trinity Mirror Plc and William Hill Plc have protested against pay reports this year.
Marks & Spencer Group Plc Chief Executive Officer Marc Bolland said today that he can’t decide on his own bonus, which is determined by the company’s remuneration committee. The U.K.’s largest clothing retailer reported its first drop in earnings in three years today, which the Financial Times said this week may place the CEO’s bonus under threat.
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