Azernews.Az

By Bloomberg

Tesco Plc said it will seek recovery of the termination payment made to former Chief Executive Officer Philip Clarke should gross misconduct be determined following the discovery of an accounting black hole.

Money paid to Laurie McIlwee, the former chief financial officer, will also be pursued in such circumstances, the U.K. grocery leader said in its annual report Thursday.

Clarke, who was replaced as CEO in September prior to the disclosure of a 263 million-pound ($409 million) profit overstatement, received a 1.22 million-pound payoff in February. Also at that time, McIlwee was handed about 1 million pounds. Tesco, which initially withheld the payments amid an internal review, hasn’t made any allegation of wrongdoing against either individual.

The U.K.’s Serious Fraud Office began an investigation into the profit overstatement almost seven months ago. Tesco shares have dropped 26 percent in the past year.

The annual report shows that Clarke’s successor Dave Lewis was paid 4.1 million pounds in his first six months as CEO, including 3.3 million pounds for forfeiting incentives due from previous employer Unilever. Alan Stewart, who joined as finance chief in September, received 2.3 million pounds through February, including 1.9 million pounds to compensate him for incentives forsaken at Marks & Spencer Group Plc.

Tesco has shifted its bonus structure this year to prioritize sales growth over profit, the annual report also shows. Half of Lewis’s annual payout will be determined by sales growth and 30 percent is linked to trading profit. Last year, half of Clarke’s bonus was determined by earnings, with only 18 percent of the amount determined specifically by sales.

The payout can reach a maximum of 250 percent of Lewis’s base salary, Tesco said.

“To deliver turnaround performance, top-line revenue growth is fundamental and will be the foundation to ensuring sustainable levels of profit in the future,” the grocer said.