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Tesco rewards Leahy with a £2m bonus

Financial Times: Tesco rewards Leahy with a £2m bonus

By Elizabeth Rigby and Sundeep Tucker

Published: May 17 2005

Sir Terry Leahy has received a bonus of more than £2m after Tesco became the first retailer in the UK to break the £2bn profit barrier this year.

The chief executive was paid a £2.08m bonus in a mix of cash and shares in the year to February 28. He also received a salary of £1.04m, taking his total pay to £3.19m, against £2.98m last time.

The board shared a pay-out of £12.8m, with the top five executive directors taking £8.54m.

Tesco paid a total of £220m in bonuses, which it claims is the largest pay-out ever for a UK company. About 2,000 top staff – including store managers – shared £38.2m, with the remaining £169m shared between 150,000 staff.

Sir Terry’s pay cements his position as one of the UK’s highest paid bosses. Last year Lord Browne of BP received £3.74m in cash, including a performance-related bonus of £2.28m. His oil major rival Jeroen van der Veer, chief executive of Shell, took home nearly £2m last year, including a bonus of about £1m. Elsewhere, Jean-Pierre Garnier, chief executive of GlaxoSmithKline, received a basic salary and bonus totalling £2.4m.

The Tesco boss also does well against other retail executives, with a basic salary of more than £1m, against £568,000 for Sir Ken Morrison, chairman of Wm Morrison, and £675,000 for Justin King, head of J Sainsbury.

However, under a new bonus scheme, Mr King could receive a pay-out of £5m if he hits the sales growth target of £20bn by 2009 and doubles earnings per share during that time.

The total pot at Sainsbury, which applies to 1,100 head office staff and store managers, is worth up to £90m.

David Reid, Tesco chairman, said he was “delighted that once again all staff are sharing in this success”, which was “down to the hard work of the Tesco team”.

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