AGM alert: is Tesco man worth £9m a year?

A £9.2 million pay package for the holder of the biggest job in UK retail will be in the spotlight when supermarket giant Tesco (LSE:TSCO) stages its AGM this month.

Ken Murphy has received a total of £29.6 million in the five years since his appointment in October 2020, including £10.2 million in the previous financial year.

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His remuneration packages for the past two years have been boosted by the grocer’s strong performance, as well as the vesting of his first long-term incentive awards.

Tesco is proposing an updated remuneration policy at its AGM, which is also the case for Kingfisher (LSE:KGF) and Whitbread (LSE:WTB) when they hold their meetings later in the month.

Tesco

When: 11.30am, Thursday 12 June.

Where: Heart building, Shire Park, Welwyn Garden City, AL7 1TW.

How to participate: A live webcast is available online but this is not interactive and it will not be possible to vote or ask questions. Proxy voting instructions should be returned no later than 11.30am, Tuesday 10 June. More AGM details can be found here.

Who’s in the chair? Former Kingfisher, Carlton Communications and Exel chief executive Gerry Murphy was appointed in September 2023.

How did the company do in the year to 22 February? UK market share rose by 67 basis points to 28.3%, with gains over 21 consecutive four-week periods resulting in the highest level since 2016. Group sales of £63.6 billion rose by 3.5%, or by 4% at constant rates. Adjusted operating profit lifted 10.6% to £3.1 billion and earnings per share by 17% to 27.38p. A final dividend of 9.45p a share is to be paid on 27 June, increasing the total by 13.2% to 13.70p. 

How have shares performed? Up 35% to 374.1p (381.4p on Thursday).

How much is the boss paid? Ken Murphy’s total remuneration for 2024/25 amounted to £9.2 million, having received £10.2 million the year before. The latest figure included an annual bonus of cash and deferred shares worth £2.9 million, which was based on 78.8% of the maximum opportunity. The 75.6% vesting of long-term incentives and the impact of share price appreciation on these awards contributed £4.7 million to the overall figure. Murphy’s base salary for this year has increased 2% to £1.49 million.

How was variable pay determined? The annual bonus was 50% weighted towards adjusted operating profit, which at £3.14 billion came in near the top end of expectations. Sales and individual objectives accounted for 30% and 20% of the bonus scorecard respectively. The vesting of long-term incentives granted in 2022 was 37.5% based on cumulative free cash flow, which exceeded the stretch threshold at £5.9 billion. The performance for adjusted diluted earnings per share represented a further 26.1%.

What’s the company say? “The remuneration for our executive directors is closely tied to the strong performance of the business. Our policy reflects the complexities of managing a large-scale operation like Tesco and is comparable to other FTSE 50 companies. A significant portion of the total package has been achieved due to Ken Murphy and Imran Nawaz (chief financial officer) meeting challenging targets in a competitive sector, creating value for all stakeholders.”

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What’s in the new remuneration policy? Committee chair Alison Platt said the policy last approved with 91.98% of votes in favour at the 2022 AGM is working effectively and that it “supports our goals of attracting, retaining and motivating high-calibre executives to deliver our strategic priorities”. Opportunity levels in relation to the 2025/26 annual bonus and the 2025 long-term incentive scheme will stay at 250% and 375% of base salary respectively.

How did last year’s AGM go? The annual remuneration report was approved with 93.49% of votes cast in favour.

How’s the company doing on diversity? The gender split of the board is 42% female, including one senior role. At least one director is from an ethnic minority background.

Kingfisher

When: 10am, Monday 23 June.

Where: No.11, Cavendish Square, London W1G 0AN.

How to participate: Voting instructions and questions in advance of the meeting should be submitted by 10am, Thursday 19 June. More AGM details can be found here.

Who’s in the chair? Claudia Arney, who has been a non-executive director of the company since November 2018, is hosting her first AGM as chair of the board. She began her career at McKinsey & Company, before holding roles at Pearson, Goldman Sachs and HM Treasury. 

How did the company do in the year to 31 January?  For the first time in over six years, the B&Q and Screwfix owner grew market share in all key regions. Like-for-like sales fell 1.7% and total sales by 1.5% to £12.78 billion. Adjusted profit of £528 million fell 7% and free cash flow £511 million declined 0.6% but were in line with or ahead of initial guidance. A final dividend of 8.6p a share is due to be paid on 30 June, resulting in an unchanged total of 12.4p a share.

How have shares performed? Up 13% to 246.2p (281.8p on Thursday).

How much is the boss paid? Thierry Garnier’s total remuneration for 2024/25 amounted to £2.28 million. This compared with the previous year’s £5.9 million, when he got £3.98 million from Delivering Value Incentive awards that combined three years worth of incentives into one long term plan. His annual bonus of cash and deferred shares totalled £804,900 and was based on 44.1% of the maximum opportunity. The 14.6% vesting of long-term performance shares contributed £404,200 to the overall figure. Garnier’s base salary for 2025/26 has increased by 2% to £936,190.

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How was variable pay determined? Between threshold and target performance was achieved for adjusted pre-tax profit and like-for-like sales growth while performance at maximum was achieved for free cash flow. The vesting of long-term incentive shares was dependent on performance against targets for earnings per share, return on capital employed, relative total shareholder return and a basket of ESG measures, all equally weighted at 25%.

What’s in the new remuneration policy? No significant changes to the structure of the policy last approved in 2022 with 89.91% of votes in favour are proposed. For 2025/26, 80% of the annual bonus will continue to be measured on financial performance and 20% of the bonus will be based on individual measures.

How did last year’s AGM go? The annual remuneration report was approved with 89.91% of votes in favour.

How’s the company doing on diversity? Half of board directors are women, with two in senior roles. Two directors are from an ethnic minority background.

Whitbread

When: 2.30pm, Thursday 19 June.

Where: Whitbread Court, Houghton Hall Business Park, Porz Avenue, Dunstable, LU5 5XE.

How to participate: The company has returned to holding a physical meeting with the addition of an audio webcast for those who would like to listen to the meeting remotely. Proxy voting instructions should be returned no later than 2.30pm, Tuesday 17 June and questions in advance submitted by 5pm, Wednesday 18 June. More AGM details can be found here.

Who’s in the chair? Former ITV and Royal Mail chief executive Adam Crozier, who was appointed in March 2018, is hosting his final Whitbread AGM. He will be succeeded in September by Christine Hodgson, who is the chair of Severn Trent.

How did the company do in the year to 27 February? Revenue at the Premier Inn owner fell 1% to £2.9 billion, impacted by lower food and beverage sales and softer UK market demand. Cost inflation and lower interest income contributed to a 14% decline in adjusted profit to £483 million, while earnings per share eased 6% to 194.6p. A final dividend of 60.6p a share is due to be paid on 4 July, resulting in an unchanged total of 97p. Whitbread also reported progress on strategic initiatives as part of its five-year plan to generate at least £300 million per annum adjusted profit and more than £2 billion for shareholder returns by 2029/30.

How have shares performed? Down 23% to 2,680p (2,856p on Thursday).

How much is the boss paid? Dominic Paul’s total remuneration for 2024/25 amounted to £3.07 million, up from £2.46 million the year before. The annual bonus scheme contributed £865,000 of cash and deferred shares based on 54.5% of the maximum opportunity, alongside £1.16 million from the 100% vesting of long-term Restricted Share Plan awards. His base salary for 2025/26 has increased by 3% to £964,080.

How was variable pay determined? Half of Paul’s incentive for 2024/25 was assessed against the company’s profit outcome, which at £483 million contributed 13.6% of the maximum for this metric. The rest was based on efficiency savings, strategic objectives and ESG metrics.

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What’s in the new remuneration policy? A Restricted Share Plan will continue to be used for long-term incentives. Awards for the chief executive are granted at 125% of salary and subject to underpins in relation to the leverage ratio and average return on capital employed in the UK business of 9% or higher. The company said: “We believe this simple incentive structure is the most effective way to align our executives and the wider management team with the shareholder experience.” For 2025/26, the maximum bonus opportunity for Paul and chief financial officer Hemant Patel will be 170% of base salary. The company is proposing that the deferral into shares requirement of the annual bonus scheme is reduced to 25% from 50%, as long as directors have met or exceeded their shareholding guideline. The remuneration policy was last approved at the 2022 AGM with 85.7% of votes in favour.

How did last year’s AGM go? The annual remuneration report was approved with 94.9% of votes in favour.

How’s the company doing on diversity? The board’s gender split of 36% is below the recommended 40%. The company said it is making good progress towards the FCA’s target with the last three appointments being female. The departure of non-executive director Chris Kennedy at the conclusion of the 2025 AGM increases the percentage to 40%. The board has 18% ethnic representation.