Yahoo Finance Tesco CEO’s near £10m pay a ‘slap in the face’ for struggling workers, union says
Tesco has been accused of giving struggling workers a “slap in the face” after the UK supermarket’s boss earned almost £10m last year as profits soared during the cost of living crisis.
Ken Murphy was given £9.9m in pay and perks, more than double the previous year and thought to be the most ever for a Tesco boss, beating £7m-plus paydays for the former chief executive Sir Terry Leahy.
More than half of Murphy’s payout relates to a long-term bonus worth three times his basic salary paid in shares that must be held for at least two years. A further £3.4m annual bonus is linked to sales, profits and individual objectives, according to Tesco’s annual shareholder report, which was published on Tuesday.
The increase in total pay means that Murphy now earns more than 430 times the average pay at Tesco, up from a multiple of 197 in the previous year. He is one of the best-paid executives among the leading FTSE 100-listed companies, although still well behind the £18.7m that the best paid – the AstraZeneca boss Pascal Soriot – could earn this year.
Tesco, which owns the Booker grocery wholesaler and runs stores in eastern Europe and the Republic of Ireland as well as the UK, last month revealed pre-tax profits had soared by 159% to £2.3bn – the highest in more than a decade – in the year to 24 February. Sales rose 7.4% to almost £61.5bn, led by strong expansion online and in large stores.
Sharon Graham, the general secretary of the Unite union, said: “Ken Murphy’s £5m wage increase is a slap in the face to the millions of struggling workers and their families who paid for it through higher food bills. The fact is, Tesco has taken advantage of the cost of living crisis to rake in obscene profits, and it is far from the only one.”
Luke Hildyard, the executive director of the High Pay Centre thinktank, added that Murphy’s pay gap with a typical employee was the third highest since pay ratio reporting began five years ago.
He said: “You couldn’t really get a better indicator of how the UK economy serves the interests of the super-rich at the expense of everybody else than this – a multimillionaire chief executive trousering another £10m while their customers endure major price rises and their employees have to get by on less than a quarter of a per cent of what the CEO takes home.”
Murphy missed out on 5% of his potential annual bonus, or £176,000, after Tesco missed targets on cutting food waste, while his fixed pay slipped to £1.6m from £1.7m a year before, after the company stopped subsidising his commuting.
Alison Platt, the chair of Tesco’s remuneration committee, said Murphy’s pay was benchmarked against pay for other FTSE 50 companies and other comparable international businesses. “This pay award reflects the fact Tesco has delivered for all of its stakeholders over the last year – from its most competitive-ever customer offer to its record investment in colleague pay.
“A large proportion of the total package has been achieved because the business met stretching targets in a highly competitive sector and worked to create value for customers, colleagues, suppliers, communities and shareholders.”
This year, Murphy’s basic salary rises 3% to £1.46m from £1.41m, so he could earn more than £9m again. The figures have emerged after Tesco was condemned by some staff as a month-long delay to a promised pay rise at the supermarket left them on less than the minimum wage, while saving the supermarket more than £17m.
About 220,000 staff shared a £70m “thank you” payment after the rise in profits, equivalent to 1.5% of annual pay, with a full-time shop worker expected to receive about £300.
The report also shows long-term share bonus payouts for the former boss of Tesco Dave Lewis and the former finance director Alan Stewart, who received shares worth almost £1.6m and £1.7m respectively in the past year based on performance while they were in the business.
