Investors Vote Against Fresh & Easy Pay Report

With Tesco’s US chain Fresh & Easy still growing in what remains a struggling US economy, nearly two in five of Tesco shareholders at a shareholder meeting last Friday voted against pay plans with concerns regarding compensation for the head of the US venture Tim Mason. At the company’s annual meeting in London on July 2, 38% of investors voted against the directors’ remuneration report. The main concern was the increase in pay delivered to Mason, who was paid £4.3 million in the 2009/10 financial year, up from his previous year’s £3.8 million, despite the consistent loss with the chain. The Fresh & Easy chain has lost nearly £165 million and doesn’t seem to be moving towards recovery with the recession overseas still leaving an impact on businesses in America. CtW Investment, a lobby group that deals closely with pensions funds linked to US unions, had a representative at the meeting who called for better transparency to link performance directly with pay within US management. Other union groups pointed to the lagging business numbers, concerned that the strategy being taken in the US will not be enough to pull Fresh & Easy out of the current slump anytime within the upcoming year. Despite the concerns, Tesco chairman David Reid made an effort to reassure shareholders, but also maintained, “This is a critical stage for the US business model – it’s absolutely appropriate that the team receives not only the basic incentives, but the incentives for driving that business model.” Sir Terry Leahy has ploughed no shortage of investment into Fresh & Easy, and the chain is starting to slowly show dividends, but is yet to prove profitable for the supermarket giant – indeed, many analysts are wondering if it ever will. Lets hope that it doesn’t become something of an albatross for his upcoming replacement, Phil Clarke.  (5 July) © 2010 - ESM: European Supermarket Magazine