Pity Dave Lewis, Tesco’s new chief executive. Since taking over at the helm last month he’s seen the value of share awards he received on joining plummet by a quarter.
It has “hurt” him, Lewis admitted to the Mail on Sunday. OK, the share awards were aimed at compensating him for those built up at Unilever, his previous employer. But before we start feeling too sorry for him, let’s not forget the other elements of his multimillion-pound golden hello: a salary of £1.25m and £525,000 a year in lieu of pensions.
Plus, the Mail on Sunday reports, just a few weeks into the job, Lewis is looking to renegotiate his bonus deal as part of wider look at executive remuneration at the fallen supermarket giant. He argues that in the wake of the £263m accounting scandal, previous executive targets focused on long-term performance are inappropriate.
“If you are doing a turnaround, then maybe you’d want some shorter-term targets for the leadership team”, he said.
Lewis will need to tread carefully here, because he risks giving furious Tesco shareholders the impression that executives will be handsomely rewarded for failure. Eight executives have been suspended – so far. Shareholders will surely think that the remaining directors could have done more to head off the looming disaster.
As my colleague Phil Oakley’s deeply worrying analysis of the company shows, Tesco is in an unholy mess, with no credible turnaround plan and lots of problems to fix.
Oakley writes: “Not so long ago it would have been unthinkable to envisage Tesco’s share price below 100p. Given the mess the company is in, I would not be at all surprised if this came to pass.”
Lewis should spend his time working on a turnaround plan rather than renegotiating his bonus package.
Read more Moneyweek articles on Tesco:
• Tesco shares could tank below a pound
• This is no buying opportunity – Tesco goes from bad to worse
• What’s Tesco’s dividend cut tells us about the future for stocks
• Company in the news: Tesco
• Tesco gets a new boss – but it’s not time to buy yet