Tesco boss Dave Lewis had his bonus for 2016/17 docked last year, despite the company’s pay committee recognising “a year of strong progress”, Sky reports.
The FTSE 100 firm’s annual report showed its chief executive took home a total of £4.1m – down from £4.6m in the previous 12 months while finance chief Alan Stewart’s bonus was cut by £400,000 to £1.2m.
The cuts were implemented for a year in which Tesco’s turnaround, led by Mr Lewis since 2014, hit a new gear with the supermarket chain recording its first annual increase in sales for seven years.
However, profits were dented by fines and other costs associated with the conclusion of investigations into the chain’s historic £326m profits scandal, which meant Tesco avoided a potential prosecution.
The accounting issue, which pre-dated Mr Lewis’s tenure, was a distraction in his early days as Tesco lost customers to rivals – especially discounters – in the bitter supermarket price war.
Mr Lewis has since sold off non-core businesses, cut prices, streamlined product lines, trimmed management jobs and closed unprofitable stores as part of his turnaround.
New challenges include growing profit margins while maintaining sales growth in an environment of rising prices and falling wage increases for shoppers – mostly a consequence of the Brexit vote – which are expected to squeeze household budgets.
Tesco is also facing investor opposition to its planned £3.7bn takeover of wholesaler, Booker.
The company’s bonus policies are linked to targets such as sales, profits and individual objectives.
Its share price is 13 per cent up over the past 12 months.
Mr Lewis’s base salary remained unchanged at £1.25m, the annual report showed, confirming it would be maintained at that level in the current year.