Tesco boss defends his near €12m pay package as sales grow

The boss of Tesco, the UK’s largest supermarket chain, said he “absolutely accepted” he was “well paid” as investors decided whether to support his £10 million (€11.7 million) pay package on Friday.

Tesco chief executive Ken Murphy’s pay more than doubled to £9.9 million in the year to the end of February, thanks largely to performance-linked bonuses of £8.3 million – making him one of the best-paid British supermarket bosses.

It comes as a trading update showed increases in sales at the supermarket’s stores, including in Ireland.

Asked about his remuneration ahead of a non-binding shareholder vote on Friday, Mr Murphy said: “[I] absolutely accept that I’m well paid,” but added that remuneration was set by the board “as delegated by the owners of the company, the shareholders” and was variable, based on stretching targets.

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Two influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, have told investors to vote in favour of the remuneration report.

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Irish Tesco shops made sales of £731 million (€870 million) in the chain’s most recent quarter, which represented an increase of 4.4 per cent, the group said in a trading update on Friday.

The retailer said the result marked a fourth consecutive quarter of volume growth, driving further market share gains, which rose 59 basis points.

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There was growth in all channels of the Irish business in the quarter through May 25th, with food sales up 5.1 per cent, and fresh volumes particularly strong, supported by investment.

Geoff Byrne, interim chief executive of Tesco Ireland, said: “I am really pleased with the strong performance of the business during the first quarter of the year.

“We grew our store footprint to 175 stores during this quarter and saw a strong performance in our online grocery home shopping business.

“Our ongoing store refurbishment upgrades, focused on enhancing fresh food areas, continues to receive positive feedback from our customers. Our recently launched 52 Weeks of Little Helps food campaign has resonated well with customers, too.”

More generally, Tesco said shoppers are spending more in stores and online as food price inflation eases, with its market share growing the most in two years.

Comparable sales at Britain’s largest grocer rose 4.6 per cent. Tesco expects to hit a retail operating profit of at least £2.8 billion this fiscal year, though it kept its forecast for the year unchanged on Friday.

Tesco said it is gaining market share by attracting customers from rivals including Marks & Spencer and Waitrose, along with matching prices with discounter Aldi.

Shares in Tesco rose 1.6 per cent in early trading in London. The stock is up about 16 per cent in the past year.

Easing inflation has also helped sales volumes, with Tesco continuing to be the cheapest of the major grocers in Britain, it said.

Sales at Tesco’s wholesale business Booker, which supplies food to restaurants, convenience retailers and catering companies, fell 1.3 per cent, partly due to falling sales of tobacco.

“Overall we think this is a strong and confirmatory set of results from Tesco, that they continue to power ahead and be strong in the UK market,” said William Woods, an analyst at Bernstein. – Bloomberg