Tesco chairman defends bonus cuts for shop floor staff at AGM
Tesco’s chairman has defended a decision to stop paying bonuses to shop floor staff, despite continued rewards for the supermarket’s executive team.
Speaking at the company’s annual general meeting (AGM), John Allan said the new pay plan announced last week provided better stability for shop workers.
“We’ve actually worked very hard to move our base pay forward,” he said.
Under the new plans, basic hourly pay for store and warehouse workers will be raised to £9.30 over the next two years, but the annual bonus for these employees has been scrapped. Meanwhile, chief executive Dave Lewis is set to take home a bonus of £1.6 million this year.
Mr Allan said the new package was more stable for staff, whereas director bonuses would change based on Tesco’s financial performance.
He added: “Anyone who currently works for John Lewis will know John Lewis bonuses used to be 15%, now it’s about 3%. So they can vary.”
Mr Allan also defended the company’s move to reduce or remove deli counter services in some branches, which is set to affect around 9,000 jobs.
“We did a major study of each one of our stores with counters,” he said. “People are tending to buy less and less from our counters.”
His comments came as shareholders overwhelmingly passed every motion at the meeting, despite calls from investor groups to oppose Mr Lewis’s pay.
Mr Lewis earned a £1.6 million bonus, on top of his £1.25 million base salary and £1.3 million through the company’s long-term share plans, Tesco’s annual report revealed last month.
But all resolutions were carried with more than 90% of votes cast at the AGM, which was held for the first time at Tesco’s head office site in Welwyn Garden City.
Mr Allan also fielded questions on animal welfare, plastics, and property developments from investors.
The atmosphere was more subdued than other recent FTSE 100 AGMs, which have been hit by climate protests, shareholder rebellions and arguments over pay.
The chairman also touched on politics after one shareholder accused him of previously providing a “Boris Johnson answer” to a question, which was “beautifully phrased, but didn’t tell me what I wanted to know”.
Responding to the accusation, Mr Allan said: “Being compared to Boris Johnson is about as bad as it gets.”
He also took a swipe at Ocado, which has recently signed a £750 million deal with rival Marks & Spencer, saying while it was a “fine company” it has not yet “found a way to make a profit”.