Tesco will not pay executive bonuses without rise in profits
LONDON (Reuters) - Tesco (TSCO.L) executives will not receive a bonus in the current financial year unless they can reverse a decline in profits at Britain's biggest supermarket operator, the company said in its annual report on Thursday.
The report rounds off a torrid year for the company, which announced a withdrawal from the United States and wrote down the value of its global operations by $3.5 billion due to the first fall in profit in two decades.
"The (2013-14) annual bonus will be less heavily weighted towards short-term profits but linked to a more balanced scorecard of financial, strategic and operational measures. However, bonuses will only be paid if profits have grown," Stuart Chambers, chairman of the Remuneration Committee said.
Having reported an underlying pretax profit of 3.55 billion pounds ($5.3 billion) for the 2012-13 year, down 14.5 percent on 2011-12, Tesco has said it expects to deliver mid single-digit trading profit growth.
Tesco, which employs more than 416,000 full-time workers, has been losing market share in Britain to discounters and high-end operators outside the "Big Four", as it battles to reverse years of underinvestment by focusing more on staff, refurbishing stores and launching new food ranges and pricing strategies.
Tesco shares fell in April when it said that it would get rid of its loss-making Fresh & Easy chain in the United States, writing down one-off costs of 1 billion pounds.
As well as the retreat from the United States, a further blow came from property writedowns of 804 million pounds in Britain and writedowns in its Turkish and Czech operations.
"It has been a year of addressing long-standing business issues, bedding in management and governance change, and laying the foundations for sustainable future growth," Chambers said.
No bonuses were paid out to executive directors in 2012-2013 because the firm's profit targets were not met. Instead Chief Executive Philip Clarke and Chief Financial Officer Laurie McIlwee received base salaries of 1.12 million and 869,000 pounds respectively.
In 2012 Clarke turned down an annual bonus of about 372,000 pounds after the retailer's poor performance, while executive directors received just 13.5 percent of the maximum bonus size. ($1 = 0.6647 British pounds)
(Reporting by Dasha Afanasieva; Editing by David Holmes)