Tesco introduces bonus clawback measures

Tesco has introduced new measures to allow it to claw back annual bonuses and performance share plan awards.

The provisions, announced in the retailer’s Annual reports and financial statements 2015, will allow Tesco to do so in the event that its financial results are mis-stated or the participant has contributed to reputational damage to the organisation.

The new measures will be introduced for the 2015/16 annual bonuses and performance share plans.

These allow Tesco to take back cash bonuses up to three years after they were handed out, while long-term share bonuses would remain subject to clawback for up to five years. 

The provisions follow the firm’s £263 million accounting scandal in 2014.

The report also outlined Tesco proposed changes to pensions, which include closing its defined benefit (DB) pension scheme and its agreed pension deficit funding plan with its trustee for its defined benefit scheme, comprising cash contributions of £270 million per year, 

Tesco is also in the process of introducing a flexible benefits package for store workers to help the employer reduce annual costs of up to £250 million. 

Dave Lewis, group chief executive at Tesco, said: “The commercial income issue identified in September was a significant blow and has resulted in a SFO regulatory inquiry.

“We have been cooperating fully with the inquiry and as we work on a programme of change across Tesco, we must ensure this never happens again.”