Tesco CEO Ken Murphy received £10.8 million in total compensation last year, an increase of approximately £1 million from the previous year, as the UK's largest supermarket chain achieved its highest market share in a decade. The pay package included a basic salary of £1.51 million, an annual bonus of £3.4 million, and a long-term bonus of £5.7 million, which includes company shares.
Pay Rise and Market Performance
Murphy's pay could increase further this year after receiving a 3% raise in basic pay to £1.54 million. Tesco's annual report revealed that the food waste target was removed as a criterion for his long-term bonus, potentially allowing for higher earnings. Tesco now accounts for more than £1 in every £4 spent on groceries in Britain, benefiting from the struggles of rivals Asda and Morrisons.
Bonus Structure and Missed Targets
Murphy's long-term bonus was nearly 25% lower than the maximum possible because he failed to meet Tesco's food waste target, which aimed for a 50% reduction by December. He also achieved only one percentage point out of 8.3 available for diversity, equity, and inclusion measures. However, he received full credit for carbon reduction efforts, such as introducing electric vehicles, and most of the reward tied to cash flow and earnings.
According to Tesco's pay committee, the food waste target was removed from the bonus scheme this year and replaced with a market share target. The company remains committed to cutting food waste by 50% across its own operations by 2030, compared to a 2017 baseline, having already achieved a 24% reduction by the end of last year. The committee stated that the target was missed primarily due to an internal review revealing that food believed to be processed for animal feed was actually going to anaerobic digestion.
Market Share and Future Goals
Tesco's market share has risen to 28.1%, up from a low of 26.5% in 2020, according to Worldpanel by Numerator. The company aims for 30%, though this remains below its peak of nearly 32% in 2007. The pay committee expressed confidence in achieving the targeted 50% reduction in food waste by the end of the 2025 bonus cycle, allowing for adjustments to the 2026 scheme to align with future strategic priorities through 2029.
Worker Bonuses and Financial Performance
Tesco workers received a bonus after profits rose by 8.5% to £2.4 billion in the year to 28 February, with sales increasing by 4.3% to £66.6 billion. Staff will share £65 million, equivalent to 1.25% of pay, or about £347 on average for a full-time employee, according to the report.
