Sir Terry Leahy, chief executive of Tesco, has bowed to shareholder pressure and become the latest senior UK executive to agree to move to a one-year rolling contract.
Tesco’s move is outlined in proposals sent to shareholders and investor lobby groups.
The supermarket was surprised last June when shareholders used the annual meeting to protest at Sir Terry’s contract, which would enable him to receive twice his annual salary even if he lost job for poor performance. By conceding ground on the contract issue Tesco hopes for a calmer meeting this year.
Investor groups welcomed the proposals but said they would have to consider the details before commenting. One investor said: “Any company which retains two-year contracts for directors now sticks out like a sore thumb. Tesco has delivered fantastic returns to investors but we have to apply the principle to all companies.
A Tesco spokesman said: “Our thinking has evolved and we have listened to shareholders. Terry Leahy had signalled his intentions on this issue and remuneration committee always seeks to adopt current best practice.”
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