Tesco’s Shareholders Vote Against the Approval of Directors’ Remuneration Report
For the record, the exclusion of Ocado from Tesco’s peer group, whose stock has increased dramatically in the recent years, led to an outperformance by 3.3% of Tesco’s Total Shareholder Return (TSR) against its peer group instead of an underperformance by 4.2% in the case of Tesco keeping Ocado in the peer group.
If Tesco’s TSR was below its peer group index, the TSR metric, which is weighted at 0.5 of the 2017 Performance Share Plan (PSP), would have been zero. As a result, this boosted the payments to the CEO and CFO by approximately GBP 1.6 million and GBP 0.87 million, respectively.
Click here for more details about Tesco’s shareholder revolt prior to their AGM.
Tesco announced its AGM results stating that:
Moreover Tesco added that:
For now, the vote on directors’ remuneration report was not legally binding, meaning it is only advisory. Bonuses paid to the executives will still be paid out. On the other hand, the huge percentage of votes against the directors’ remuneration report (67.29%) is the largest pay revolt in Tesco’s history in the last decade.
We have seen that shareholder activism was used through Say on Pay at Tesco’s latest AGM, which means that in the future if the company is not transparent with its investors, investors will not hesitate to raise their voice against any decision they consider inappropriate or gullible.
Using data and analytics found in the CGLytics software platform, companies, investors, proxy advisors and service providers efficiently analyze and spot governance risks and red flags in seconds.
If Tesco understood how they were perceived by proxy advisor Glass Lewis prior to the proxy season and their AGM, they could have prepared adequately and avoided negative votes.
Would you like to see how your executive compensation is viewed by leading independent proxy advisor Glass Lewis and large institutional investors?
Click here to contact CGLytics or learn more about the Glass Lewis CEO compensation analysis and peer group modeling for Say on Pay engagement, available exclusively via CGLytics.