Boss Paid £4.6m For Tesco Turnaround Year

Tesco (Xetra: 852647 - news) boss Dave Lewis was paid £4.6m including a £3m bonus for the last financial year – during a period in which the group's share price fell by a quarter.

The pay package for the year to the end of February was the biggest since Sir Terry Leahy was running Britain's biggest supermarket five years ago and received £7.2m.

Tesco's annual report also confirmed that its 300,000 employees will be awarded a one-off "turnaround bonus" worth 5% of salary.

Mr Lewis was drafted in to take the reins at the retail giant in September 2014 after it was hit by an alarming sales slide and profit alerts under Sir Terry's successor Philip Clarke.

Tesco posted a record loss of £6.33bn for 2014/15 but swung back into the black with a £162m profit for 2015/16 – though this sum was well short of the level of earnings enjoyed by the company in the boom years under Sir Terry.

The supermarket has been fighting stiff competition in the sector amid a fierce price war.

Its shares took a tumble after the latest results despite the return to profit as it warned it would have to continue cutting prices to stay competitive in a "challenging, deflationary and uncertain market".

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Mr Lewis has acted to turn around the business by acting on prices, streamlining product lines, cutting management jobs, closing unprofitable stores and selling off subsidiaries such as the Blinkbox online video operation.

But the shares were about a quarter lower at the end of the 2015/16 financial year than they were a year before.

Mr Lewis's pay package is disclosed in Tesco's latest annual report, which also reveals that finance director Alan Stewart was paid £2.6m including a £1.6m annual bonus.

Mr Lewis said: "We have taken decisive, immediate action on the challenges we faced. In a very deliberate way we have made the changes needed to re-energise the operation.

"We have stabilised the business and we are on track with where we expected to be."

Deanna Oppenheimer, chair of the supermarket’s remuneration committee, said it had made "strong progress" in reversing the "steep, negative trend" it had been facing – including better sales, lower costs, and restructuring.

"As a result, financial targets for sales and operating profit, representing 80% of the bonus, were met almost fully for both Dave Lewis and Alan Stewart," she added.