Tesco (TSCO.L) chief executive Dave Lewis saw his pay package jump in his final full year in charge, new accounts show.
Lewis’ total remuneration rose to £6.4m ($7.9m) in the 12 months up to 29 February 2020, according to Tesco’s annual report. That was up from £4.7m in 2019.
Lewis’ salary remained steady at £1.25m but his bonus and long-term share award payout rose from £3.1m to £4.8m. Lewis was awarded 75% of the total variable pay he could have earned.
The payout was conditioned on hitting targets linked to revenue and profit growth, corporate development, and succession planning, among other things.
Tesco sales fell 1% to £56.5bn in the 12 months to 29 February 2020, but group operating profit climbed 13.5% to £2.9bn. Meanwhile, Tesco also exited a joint venture in China and agreed the sale of its Thai and Malaysian business shortly after the financial year ended.
Steve Golsby, remuneration committee chair, wrote in the annual report: “Tesco has delivered a strong performance against a backdrop of challenging external conditions.
“The committee used its judgement in evaluating the strategic objectives, which varied from executive to executive.”
Lewis, who has run Tesco since 2014, is set to step down in September. Tesco said he would still be eligible for a bonus next year given his leaving date. He has been granted “good leaver” status and will be granted all unvested bonus shares from his remaining incentive plan when he leaves.
Lewis is set to be replaced by Irish-born Walgreens Alliance Boots executive Ken Murphy. Murphy will earn a base salary of £1.35m in the role, the report shows, and is eligible for a bonus of up to £3.3m in his first year.
Murphy, who is currently based in the US and has a main residence in Ireland, will also get two years of relocation support to assist him if he moves to the UK.
Tesco’s annual report covers a time before the COVID-19 pandemic hit. Lewis wrote in the accounts that the pandemic presents “unprecedented challenges” and “almost no part of our operation that remains untouched.”
The supermarket has estimated COVID-19 could add up to £925m in additional costs, as it recruits extra staff to replace sick employees and invests to make its stores coronavirus safe.