Tesco chief’s pay more than doubles to £10mn

The boss of Tesco, the UK’s largest supermarket chain, has seen his pay more than double to almost £10mn for the past year after receiving a bumper share award for improving the performance of the business.

Ken Murphy’s pay package has reached £9.9mn this year according to Tesco’s annual report, published on Tuesday, thanks largely to performance-linked bonuses of £8.3mn. That compared with total pay of £4.4mn the previous year and makes Murphy one of the best paid British supermarket chief executives.

Some £4.9mn of the total payout came from shares that were awarded to Murphy when he joined, and paid out this year after he surpassed certain performance targets.

Murphy’s remuneration is currently higher than rivals, with the exception of a proposed pay package of almost £15mn for Ocado’s chief executive Tim Steiner, which attracted the ire of investors at its annual meeting last month.

Since Murphy joined the retailer in October 2020 he has presided over a 20 per cent increase in its share price, following a turnaround of the supermarket under predecessor Dave Lewis.

In April, the FTSE 100 company forecast rising profits this year and announced a £1bn share buyback, as consumer sentiment improved. It posted a 10.9 per cent increase in retail adjusted operating profit, which excludes results from Tesco Bank, to £2.76bn, on sales of £61.5bn.

Alison Platt, chair of Tesco’s remuneration committee, said the significant year-on-year increase was largely due to the business meeting “stretching targets in a highly competitive sector” including achieving £640mn of savings, and winning customers from other rivals.

UK supermarkets have had to contend with high inflation and customers tightening their belts and trading down amid the cost of living squeeze over the past two years.

Tesco has maintained that it has not profiteered from surging food inflation and operates on slim profit margins. It has leveraged its Clubcard loyalty scheme and its promise to price match discounter Aldi as well as lowering prices on key items to gain market share. It commands 27.4 per cent of the UK grocery market according to data firm Kantar.

Platt added the total pay also reflected “the complexities of managing a business of the size and scale of Tesco”, which has more than 300,000 employees. Tesco has said it invested more than £800mn in colleague pay over the past two years.