Tesco pays out £1.2m to former chief executive
TESCO has reluctantly agreed to hand over more than £2m in payments withheld from its former chief executive and former chief financial officer in the wake of last year’s shock £263m profit scandal.
Britain’s biggest supermarket said yesterday that it will pay Philip Clarke £1.22m and Laurie McIlwee £970,880 in “liquidated damages” after lifting suspensions on contract settlements.
The payments had been suspended after Tesco’s revelations in September that profits had been overstated by £250m (then found to be £263m) prompting an investigation into the retailer’s accounting practices.
Clarke was ousted as chief executive two months earlier after yet another profit warning and dwindling sales, with Unilever executive Dave Lewis appointed as his successor. Tesco said yesterday that following legal advice, it had concluded it did not have the basis for continuing to withold the payments.
“The company is contractually committed to make the relevant payment to each former director unless it can legally establish a case of gross misconduct against him,” Tesco said.
The company added that an accounting probe by the Serious Fraud Office was ongoing and that it would look to recover the payments if new information came to light that changed its assessment.
The news comes after Lewis last month unveiled radical plans to cut hundreds of millions of pounds of costs and halve capital spending in a bid to revive the fortunes of the troubled supermarket. The group is axing 43 unprofitable stores, shelving 49 new projects and closing its Cheshunt head office as part of its turnaround.
Meanwhile Tesco is also close to announcing the appointment of its next chairman as Sir Richard Broadbent prepares to stand down following last year’s turmoil.
John Allen, the chairman of housebuilder Barratt Developments and the deputy chairman of electricals retailer Dixons Carphone, is tipped to be named as his successor.