Yahoo Finance Tesco criticised as chief pockets £4.75m amid soaring prices
Ken Murphy is awarded highest annual bonus by supermarket since 2016 as profits more than double thanks to easing of lockdown
Tesco has been criticised for paying its chief executive £4.75m last year, including the highest annual bonus awarded by the supermarket since 2016, as families struggle with rising food costs.
Ken Murphy’s package included a £3.21m bonus, while the finance director, Imran Nawaz, earned a £1.24m bonus – taking his total to £5.4m for the year, including a £3.5m “golden hello” relating to bonuses he lost out on in leaving his former employer, Tate & Lyle.
The payouts came as Tesco’s pre-tax profits more than doubled after pandemic restrictions eased.
Murphy, who joined the UK’s biggest supermarket chain in October 2020, could earn up to £10.7m this year if he meets certain performance targets.
The TUC general secretary, Frances O’Grady, said: “Tesco workers and customers will be stunned at these levels of remuneration when they are struggling to keep food on the table in the cost of living crisis.
“Pay inequality has gone much too far. A Tesco customer assistant would have to work for 267 years to get what the Tesco boss was paid for just one year. It’s time we had maximum pay ratios to bring some fairness back.”
Andrew Speke at the High Pay Centre said the big executive payouts would not be well received by Tesco staff and customers.
“One of Britain’s best-known companies awarding its top dog such a large pay package amid the cost of living crisis will not go down well with Tesco’s workers or its customers. Tesco should be spending this money on raising the pay of its workers to protect their living standards from rising inflation and keeping its food prices as low as possible, to ensure its loyal customers can still afford to shop there as food prices rocket across the board.”
Related: ‘Golden era’ of cheap food is ending, says ex-Sainsbury’s boss
Details of the payouts come amid hefty food inflation driven by rising energy and basic commodity costs partly as a result of the war in Ukraine.
The Tesco chairman, John Allan, said earlier this week that the UK was facing “real food poverty for the first time in a generation”. He said some of the supermarket’s customers were asking staff to stop putting their groceries through the till once they had reached a certain total, leaving some items behind, as they ration food spending.
He argued that there was as an “overwhelming case” for a windfall tax on oil and gas companies to help those suffering the most from the cost of living crisis.
Tesco doubled pre-tax profits to more than £2bn last year but has warned on profits for this year as it faces a battle to “keep the cost of the weekly shop in check”.
Steve Golsby, the head of Tesco’s remuneration committee, said it was satisfied that the bonus payouts were “appropriate and reflect performance over the respective performance periods”.
“We achieved this strong performance against a backdrop of significant change in the retail sector. Customers are faced with an increasing range of choices as to where, how and when to shop, with the Covid-19 pandemic accelerating a number of profound shifts in consumer behaviours. Our executive directors have successfully navigated this period of uncertainty as demonstrated in their performance this year,” he said.
Murphy’s and Nawaz’s pay is dwarfed by the total of £10.5m paid out to Tesco’s former finance director Alan Stewart in the past year, including £8.58m from cashing in share awards related to historic performance by the business that matured on his exit on top of £1.95m in pay.
Former chief executive Dave Lewis also continues to benefit from his time at Tesco, with £1.89m from a deferred bonus and share award paid out last summer.
This year, Murphy will be able to receive a bonus even if Tesco does not reach its profit ambitions after a change in the company’s rules. However, his full payout will be subject to cutting food waste, increasing diversity and reducing the retailer’s carbon footprint for the first time.
Last month, Tesco said it would pay out about £50m in “thank-you” bonuses to workers in stores, warehouses and customer contact centres, and it recently promised to invest £200m in increasing its rate of pay for shop-floor staff by 5.8% to a minimum of £10.10 from 24 July.
However, the supermarket has been criticised for taking away the right to additional sick pay for those with Covid from this month.
Several chief executives of companies that were hit hard during the pandemic have been awarded bonuses for 2021. Whitbread, the owner of the Premier Inn hotels chain, this week reported that chief executive Alison Brittain’s pay had doubled year on year to £2.2m for 2021, including a £1m bonus.
The bonus was paid despite shares in the company barely rising in value during the course of 2021.
Whitbread’s share price remained more than a third below its pre-pandemic levels on Friday. Brittain also gave up a £729,000 bonus that had been deferred from 2020 to avoid a backlash after Whitbread accepted hundreds of millions of pounds of government aid through furlough payments and business rates relief.
Whitbread declined to comment.
