May 14, 2020

Tesco changes bonus rules after Ocado success hits pay

Tesco executives saw their pay boosted last year after online supermarket Ocado was removed from a calculator used to set bonuses. Dave Lewis, Tesco's chief executive, would have missed out on free shares worth more than £2m if Ocado stayed on a list used to compare rivals' success. Tesco said Ocado was no longer relevant as it was a technology business. By removing the Ocado comparison, Tesco shares outperformed the three-year total return index by 3.3%, rather than underperforming by 4.2% if the online rival was included. In the annual report, the remuneration committee explained: "As Ocado has seen a significant shift away from being a retail-focused business towards a technology-focused business during the performance period, the committee decided to remove Ocado from the benchmark from 16 May 2018. This was the date on which a clear pattern emerged of Ocado pursuing a technology strategy."That date is the day before Ocado announced a major deal to supply its technology to US supermarket group Kroger.

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