May 13, 2020

Tesco boosted executive pay by axing Ocado from peer group

Tesco executives enjoyed a pay boost after online supermarket Ocado was removed from a peer group used to calculate comparative returns. In its annual report on Wednesday, Tesco said Ocado was no longer a relevant competitor as it was now a technology group. By removing it from a custom index, Tesco shares outperformed its new peer group by 3.3 per cent a year on a total return basis over three years rather than underperforming it by 4.2 per cent. No adjustments to 2019/20 pay were made in light of the Covid-19 pandemic, though remuneration committee chairman Steve Golsby said that the company "Remains sensitive" to the issues around executive pay and might adjust next year's payouts "To ensure that executive directors do not benefit unduly from windfall gains when the market recovers". Deborah Frost, chief executive of Personal Group, said it was "Highly unusual" for metrics to be changed during the course of an incentive scheme, other than when comparator group companies were delisted or taken over.

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