Philip Clarke, CEO of the British supermarket chain Tesco, gave up his annual bonus of £ 372,000 in reaction to the company's disappointing business results on the UK market. Therefore, he earns only his basic annual salary of £ 1.1 million. Lower bonuses affected also Tesco's executive directors and 5000 managers. The executive directors will gain only 13.5% of the maximum cash bonus amount (the maximum bonus amount is 27% of basic salary) and the 5000 managers will gain 17% of this amount.
Although the third largest retail network in the world has achieved a profit of £ 3.8 billion in its financial year to 25 February 2012, its success on world markets covered the 1% decline on the domestic market.
The remuneration policy for senior managers in Tesco has already undergone a reform last year after its shareholders' revolt. More than half of the shareholders refused to approve the existing conditions for the payment of bonuses. The current remuneration structure combines four original long-term incentive plans into one. Performance is evaluated on the basis of two instead of former five measures - return of capital involved and earnings per share. The number of measures for annual bonuses has been reduced from more than twenty to seven.
Rank and file employees will share £ 110 million from the employee cash bonus scheme. More information about the structure of pay and business performance of the company is available in the annual report that has just been published on the Tesco website.
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