Tesco execs will have to hand back bonuses in future over misstated results
A new provision will allow Tesco to take back top executives' bonuses if results are misstated
25 May 2015 | 0
Tesco has introduced a new ‘clawback’ provision, whereby executive directors could end up having to hand back their bonuses up to five years after they were awarded. The new scheme will come into force if Tesco discovers financial results have been misstated or if executives’ actions damage the company’s reputation in future.
Irish executives subject to the clawback provision include chief operating officer Geoff Byrne, commercial director John Paul O’Reilly, legal director Sarah Gallagher, marketing director Henry Dummer, personnel director Geraldine Casey, corporate affairs director Christine Heffernan, chief financial officer Adrian Lewis and new Tesco Ireland chief executive Andrew Yaxley.
The Sunday Independent reports annual cash bonuses can be recouped by Tesco for up to three years after they were first awarded, while long-term share bonuses could potentially be clawed back for up to five years.
The news comes after Tesco was obliged to pay out upwards of €2m in bonuses to its former group chief executive and group finance director last year. This is despite the fact that the group discovered profits had been overstated by more than €250m.
Former group chief executive Philip Clarke received £1.2m for loss of office, while ex-group finance director Laurie McIlwee was paid £970,880. Tesco attempted to withhold these payments while the investigation into the accounting scandal was ongoing. However the supermarket was contractually obliged to pay up unless it could establish that gross misconduct was at play.
The newspaper also reports that new chief executive Dave Lewis’ annual bonus will be tied to the company’s sales growth, 30% to profit and 20% on the delivery of operational and strategic goals. By contrast, only 18% of Clarke’s yearly bonus was pegged to sales growth.