Tesco shareholders attack bosses over staff ’s ‘slave wages’
TESCO was condemned yesterday for failing to pay the Living Wage to shop workers while turning failed executives into millionaires.
Bosses at the firm, which posted a record annual loss of £6.4billion last year, faced fierce criticism over the supermarket’s decline at an annual meeting of its small shareholders.
Amid falling sales, the company is at the centre of a Serious Fraud Office investigation into allegations trading profits were artificially inflated by £326million.
Shareholders said Tesco’s failure to pay the Living Wage – £7.85 an hour, or £9.15 in London – meant the taxpayer had to make up the shortfall through tax credit payments, estimated at £364million last year.
Shareholder Michael Mason-Mahon attacked the board to wide applause, saying: ‘You’re a cancer on our society because you keep the poor, poor. This is not right.
‘Slavery was abolished … The new slogan should be “Tesco – we do not pay Living Wage but we do reward our executives for failure and make them multimillionaires”.’
The retired businessman told the AGM in Westminster: ‘What we need is executives who act with honour and integrity.
‘Society can no longer accept the greed of executives in the UK, we need integrity and not people who just fill their pockets at the expense of others.’ Tesco pushed out chief executive Philip Clarke last year amid claims he failed to respond to the threat posed by Aldi and Lidl.
He was also in charge when the firm overstated profits. But he left with a £1.2million lump sum and a pension pot approaching £14million.
The firm’s former chief finance officer Laurie McIlwee received £1million and a pension pot of nearly £7million.
New chief executive Dave Lewis, brought in to turn the supermarket around, has been paid £4.1million for six months work, including a £3.2million ‘golden hello’.
Mr Mason-Mahon compared Mr Lewis’s £3,424-a-day pay with the £46-per-day of those working in Tesco stores – close to the minimum wage of £6.50 an hour.
Mr Lewis defended staff pay, saying: ‘We start from a place where the salary paid to colleagues in Tesco is the leading figure in the marketplace. We pay 4-7 per cent more than our competitors.’ The criticism drew a promise from new Tesco chairman John Allan to hold talks with Citizens UK, which campaigns for the Living Wage.
‘We’ve heard a lot of people talk about Living Wage today and we would have to be deaf in both ears not to have picked up that message,’ Mr Allan added.
One investor complained that dividends to shareholders had fallen while other payments, such as those to axed executives, had risen. Another asked why the stock market value of the firm had collapsed from £14.7billion to £7billion.
Fellow shareholder Anthony Lee added: ‘When I bought shares, Tesco was the Rolls Royce of retail but now it has become the Ryanair.’
Tesco has stripped out a layer of senior management and directors, is closing 43 loss-making stores and has shelved plans to open a further 49, including some that have already been built. The retailer has slashed the price of 700 groceries and moved away from issuing coupons.
Despite these efforts, the value of sales in 13 weeks to the end of May was down 1.3 per cent on the same period last year. Mr Allan said: ‘No one should underestimate the time it will take to turn the business around … We are going to put the “great” back into this business and get it back on its feet.’
City & Finance – Page 91
‘Rewarding executives for failure’