Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newsletter.
The boss of Tesco, the UK’s largest supermarket chain, has seen his salary more than double to almost £10m over the past year after receiving a bumper share reward for improving business performance.
Ken Murphy’s pay package has reached £9.9m this year according to Tesco’s annual report, published on Tuesday, thanks largely to performance-linked bonuses of £8.3m. This compares with his total salary of £4.4m the previous year and makes Murphy one of the highest-paid British supermarket chief executives.
Around £4.9m of the total payout came from shares awarded to Murphy when he joined and paid out this year after he surpassed certain performance targets.
Murphy’s compensation is currently higher than his rivals, with the exception of a Proposed pay package of almost £15m for Ocado chief executive Tim Steiner, which attracted the ire of investors at its annual meeting last month.
Since Murphy joined the retailer in October 2020, he has presided over a 20 per cent rise in its share price, following a turnaround of the supermarket under predecessor Dave Lewis.
In April, the FTSE 100 company forecast increasing profits this year and announced a £1 billion share buyback as consumer confidence improved. It recorded a 10.9 per cent rise in retail adjusted operating profit, which excludes Tesco Bank results, to £2.76bn, on sales of £61.5bn.
Alison Platt, chair of Tesco’s remuneration committee, said the significant year-on-year increase was largely due to the business meeting “expanding targets in a highly competitive sector”, including saving £640m and attracting customers of other rivals.
UK supermarkets have had to deal with high inflation and customers tightening their belts and lowering their prices amid the falling cost of living over the past two years.
Tesco has maintained that it has not benefited from rising food inflation and operates on thin profit margins. It has taken advantage of its Clubcard loyalty program and its promise to match retailer Aldi’s prices, as well as lower prices on key items to gain market share. It controls 27.4 per cent of the UK food market, according to data company Kantar.
Platt added that the total salary also reflects “the complexities of running a company of the size and scale of Tesco”, which has more than 300,000 employees. Tesco has said it has invested more than £800m in salaries for colleagues over the past two years.