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Tesco could claw back former chief executive's £1.2m pay-off
Supermarket says that it will pursue recovery of Philip Clarke's £1.2m termination fee if it can be shown that there was gross misconduct during his reign
Tesco has said that it will pursue the recovery of former chief executive Philip Clarke's £1.2m pay-off if new evidence reveals that there was gross misconduct during his leadership of the supermarket.
The supermarket chain revealed in its annual report that it has "explicitly reserved the company’s rights to pursue recovery of these payments" should new information arise that shows gross misconduct occurred on his watch.
Mr Clarke's three year tenure as chief executive of Britain's biggest supermarket ended in tatters last July following a stark profit warning, having presided over declining sales.
Two months later Tesco revealed a major accounting error which revealed that profits for the previous six months had been overstated by £250m.
The accounting scandal rocked the supermarket group's shares and has led to an investigation by the Serious Fraud Office.
Tesco had tried to withhold the monies due to Philip Clarke and chief financial officer Laurie McIlwee as it reeled from the discovery of a shortfall in profits.
However, in February the retailer said that it was contractually committed to pay up unless it could establish a case of gross misconduct.
The group's annual report also revealed that Mr Clarke was paid a £764,000 salary last year, and it faces legal and outplacement costs of £85,000 in connection with his departure.
Mr Clarke will also keep his staff discount - worth 10pc - at Tesco's stores for life.
The supermarket also revealed that it has paid new chief executive Dave Lewis £4.1m for his six months work so far in turning around the retailer.
Mr Lewis joined from consumer goods giant Unilever and has so far taken a kitchen sink approach to the business, last month revealing the biggest loss in UK retail history.
Tesco explained the £4.1m award to Mr Lewis was the cost of luring him away from Unilever. It was made up of a £525,000 cash payment to replace the bonus he would have received, benefits of £97,000, a pension of £143,000 and £3.3m in incentives.
Tesco also said that half of Mr Lewis' annual bonus will be pegged to the company's sales growth, 30pc to profit and 20pc on the delivery of operational and strategic goals. By comparison, only 18pc of Mr Clarke's annual bonus was linked to sales growth.
Shares in Tesco rose 0.5p to 221p on the back of unconfirmed reports it is looking to sell its Korean business.