Tesco – AGM 26 June 2020
Items 2 and 8: Remuneration report and re-election of the Remuneration Committee
Chair
ECGS has serious concerns over the executive remuneration and considers that the
Committee has taken controversial decisions. The 2017 LTIP peer group was revised
and the deletion of Ocado has significantly increased the payout. The CEO will benefit
from "good leaver" treatment for his surprising departure without any justification from
the Committee and we see no basis for granting such privilege. This will offer him the
right to unvested awards which value was estimated at £9.7m. Since his appointment
on 19 July 2014, the share price lost 20% and Tesco significantly underperformed
peers. The 2019/20 remuneration increase is not supported by Tesco's performance.
Items 3 and 24: Final dividend and share buybacks
The payout ratio is high and the dividend is not covered by free cash flow. The group's
debt is too high and the dividend is financed through divestments. The dividends
increased by 59% while EPS declined by 23.9%. The dividend increase is particularly
controversial because Tesco will pay a £635m in final dividends while it accepted a
similar-sized tax break from the government's emergency coronavirus support package.
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