Tesco chief executive, Philip Clarke has opted not to take his annual bonus this year.
The supermarket with the largest market share in the UK has delivered its first fall in profits in the UK for 30 years.
This follows Tesco's share of the UK grocery market falling to its lowest point for seven years to 30.8 per cent in the 12 weeks to May 13th.
Mr Clarke’s decision comes after he wrote to 5,000 staff to tell them that their annual bonuses have been cut. Other board directors have also seen their bonuses reduced as Tesco attempts to convey the message to its staff that after years of profits and bonuses the trend is reversed when the performance of the company is not successful.
In a statement Tesco said that its top 5,000 managers will receive a reduced annual bonus of 16.9 per cent of the maximum payable under their bonus scheme and that executive director’s will receive 13.54 per cent of the maximum. In the previous year these staff had received 100 per cent of the allowable bonus.
The figures, published today in Tesco’s annual report show that Mr Clarke was paid £1.15 million last year, down by almost half from £2.26 million last year which included a bonus of £1.39 million.
In response to the concerns of shareholders, Tesco has also amended bonus payments for directors if they lose their jobs. Termination payments in lieu of salary are to be limited to salary and benefits only and will not include any bonus payments.
Mr Clarke said: “I decided at the beginning of the year that I would decline my annual bonus for 2012. I wasn’t satisfied with the performance in the UK and I won’t take the bonus. I’m confident that we’re tackling the right issues and building a better Tesco for customers, colleagues, shareholders.”
The total bonus pot for staff was £110 million.
Overall, Tesco posted record group profits and generated £1.1 billion of profits globally. However, its core UK market suffered announcing its first profit warning in 20 years in January and losing ground to budget rivals Aldi and Lidl and upmarket grocers such as Waitrose.
Part of the reason for Mr Clarke to waive his bonus is the revolt by shareholders in recent weeks over high pay for poor company performance which has seen shareholders vote in large numbers against the remuneration reports of FTSE 100 companies such as Aviva in the so-called “shareholder spring.”
Mr Clarke's decision will add to pressure on other senior executives to decline their bonuses.
Tesco shares declined slightly today following the release of the remuneration report and Mr Clarke's announcement.
Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.
Save money on your gas and electricity bills
Compare all energy prices with uSwitch and save up to £400.
Twitter: My Finances
Join the conversation at #news_myfinances