Tesco’s chief executive took home £4.75m in pay last year after being awarded the highest annual bonus by the supermarket since 2016 as pre-tax profits more than doubled as pandemic restrictions eased.
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 leaving his former employer, Tate & Lyle.
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.
Details of the payouts come as families struggle to cope with the rising cost of living, including hefty food inflation.
The Tesco chairman, John Allan, said earlier this week that the UK was facing “real food poverty for the first time in a generation”.
Allan 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 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.
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.
Andrew Speke at the High Pay Centre said the big executive payouts would not be well received by Tesco staff and customers.
He said: “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.”
Murphy’s and Nawaz’s pay is dwarfed by a 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.
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.
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”.
Last month, Tesco said it would pay out about £50m in a “thank you” bonus to workers in stores, warehouses and customer contact centres and it recently promised to invest £200m to increase its rate of pay for shopfloor staff by 5.8% to a minimum £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 who 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 2021 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.