The retailer said 280,000 UK staff will share a payout worth £56 million, down from £110 million a year earlier and worth a maximum of £1,625 per worker.
About 5,000 top managers and its board have also been denied bonuses and long-term shares awards after the retailer's 2012/13 performance "fell short of where we wanted it to be", its annual report revealed.
Tesco endured a "challenging" year in 52 weeks to the end of March, with bottom line pre-tax profits diving 51.5% to £1.96 billion as it was hit by slowing sales growth and a raft of hefty writedowns.
These included an £804 million charge from its decision to scrap more than 100 major store developments in the UK. It also took a £1.2 billion hit from its failed foray in America and is offloading its loss-making Fresh & Easy business. Tesco is instead focusing on reinvesting profits in its existing UK business and expanding online, part of a £1 billion overhaul.
Mr Clarke and Mr McIlwee missed out on long-term shares worth a combined £2.4 million when the awards lapsed because of the missed performance targets. Tesco's top 5,000 bosses earned 16.9% of their bonus potential a year earlier.
Stuart Chambers, chairman of the group's remuneration committee, said: "This demonstrates that our remuneration policy is effective in aligning pay with performance".
The £56 million staff shares award is equivalent to 1.5% of an employee's earnings, and is payable to workers who joined the group before February 25. Shares are held in trust and can be sold after three years.
A spokeswoman said while the staff payout is not tied to specific measures, "it's not been a secret that it's been a challenging year for the business".
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