Tesco directors face challenge from shareholders
It has been revealed by a number of significant shareholders in Tesco are concerned about the level of remuneration enjoyed by some directors and the structure of share incentive schemes. This comes just days after Sir Terry Leahy decided to announce his retirement next year and his withdrawal from Tesco after more than 30 years with the group. However, institutional shareholders in Tesco are likely to challenge the remuneration packages available to Tesco directors in the future.
There is growing concern that the share incentive schemes have targets which are "uncompetitive" and indeed it there is also concern about directors being "rewarded twice" due to the schemes in question having the same targets. The company has already revealed its "disappointment" at the lobbying group comments in the press and it is highly likely that institutional shareholders will be contacted by the company to see if any middle ground can be found.
Over the last few months we have seen a significant increase in shareholder power and a number of remuneration packages have been voted down by institutional shareholders. Whether Tesco will be able to put in place a new agreement before the shareholder vote remains to be seen but it would be highly embarrassing to see institutional shareholders vote against the remuneration package proposals.
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