Tesco Plc: Who, Where, How Much?

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A Corporate Profile

By Corporate Watch UK
Completed October 2004

2. Who, where, how much?




Head office:


Tesco House

Delamare Rd




01992 632222

'The company is run from an ugly concrete building in rural Hertfordshire, next door to a handful of scruffy pubs and a betting shop. Inside, dimly lit and spartan, it would make a fitting home for a parochial British manufacturer.'1

Tesco's head offices are situated along an industrial estate in Cheshunt. Its a far cry from the Mayfair or Park Lane addresses of many of the other FTSE 100 companies Corporate Watch monitors. In a way, this is reflective of Terry Leahy and his management style. It is all very ordinary. No fuss or fanfare, no pomposity or conspicuous consumption.Around 1000 support staff work in Cheshunt for the massive multinational.

Company Structure/Ownership


Tesco PLC is a publicly owned company.

Share Value

See www.tesco.com/corporateinfo

Major shareholders (% at 01/06/2004)2

1. Barclays Global Investors (3.82%)

2. Legal and General (2.79%)

3. Schroder Investment Mgt Ltd (2.87%)

4. State Street Global Advisors (2.73%)

5. Axa Investment Managers (2.63%)

6. Threadneedle Investments (2.33%)

7. Scottish Widows (2.08%)

8. M & G Investment Mgt Ltd (1.99%)

9. Morley Fund Management (1.88%)

10. UBS Global Asset Mgt (1.73%)
Group Sales

2003 - £28,280m

2004 (53 weeks) £33,557m

2004 (52 weeks pro forma) £32,989m

According to the Annual Review, this means that group sales rose 18.7% in 2004.3
Financial management

A tiny chink in Tesco’s armour can be seen from the fact that it is really spending at the edge of its means, as underlined by the £773m share placing in January 2004, and the £650m property sale in March 2004. This trend is set to continue with Tesco spending forecast at £7bn over the next three years, which will make big dividend increases and debt reduction difficult.4

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Board of Directors5


During 2004, several long serving members of the board have retired including former chairman John Gardiner.

Current directors:

Sir Terry Leahy, Chief Executive (48 years old)

Appointed 1997

Salary: £955,000 (£2.9m including benefits and profit sharing)

David Reid, Non-Executive Chairman (57)

Appointed 1996. Responsible for international development. Non Executive Director of De Vere Group Plc.

Salary: £691,000 (£2.977m)

Lucy Neville Rolfe - Company secretary (51)

Appointed to the Board in April 2004

She retains her existing responsibilities for Corporate Affairs.

See section on 'Government links' for more details.

Richard Brasher, Commercial and Trading Director (42)

Appointed to the Board in April 2004. He has led the company's non-food and commercial and trading activities, following his role as the UK Marketing Director.

Philip Clarke, International Operations and IT Director (43)

Appointed 1998

Salary: £531,000 (£1.657m)

Andrew Higginson, Finance and Strategy Director (46)

Member of the 100 Group of Financial Directors, Non-Executive Director of C and J Clarke Ltd and BSkyB.

Salary: £538,000 (£1.659m)

Tim Mason, Marketing and E-commerce Director (46)

Appointed 1995; Non Executive Director of Capital Radio Plc.

Salary: £538,000 (£1.681m)

David Potts, Retail and Logistics Director (46)

Worked in Ireland 1997 – 2000 before returning to take up current position

Salary: £531,000 (£1.661m)

Rodney Chase, Deputy Chairman and Senior Non-Executive (60)

Appointed in 2002. He stood down as the Deputy Chief Executive of BP Plc in 2003.

He is also a Non-executive Director of Diageo plc and Computer Sciences Corporation.

Salary: £49,000 (half year)

Charles Allen CBE, Non Executive Director (47)

Appointed 1999, also Chief Executive of ITV, formerly Chairman of Granada Group Plc.

Salary: £47,000

Mervyn Davies, Non Executive Director (51)

Appointed July 2003. He is a Group Chief Executive of Standard Chartered PLC, a non-executive director of Tottenham Hotspur PLC and is a member of the Hong Kong Association Business Council.

Ken Hydon, Non-Executive Director (59)

Appointed in February 2004. He is the Financial Director of Vodafone Group Plc and a Director of Verizon Wireless. He is also a Non-Executive Director of Reckitt Benckiser Plc.

Dr Harald Einsmann, Non Executive Director (70)

Appointed 1999. Non Executive Director of EMI Group Plc, on board of Stora Enso Oyj (part of the Wallenberg Group), Director of British American Tobacco Plc, Operating Partner in EQT, a private equity group in Sweden.

Salary: £44,000

Veronique Morali, Non Executive Director (45)

Appointed 2000. Chief Operating Officer and Director of Firnalac SA

Salary: £ 44,000

Graham Pimlott, Non Executive Director (54)

Appointed 1993. Deputy Chair of Hammerson Plc. Non-Executive Director of Provident Financial PLC and Chairman of the Export Credit Guarantee Department.

Salary: £72,000
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Executive pay


According to the Guardian, the eight directors who run Tesco earned £26m between them in 2003-2004. 6 This is more than any other board of directors in the FTSE 100. The Tesco key players netted £4m more than directors from Vodafone, in the number two spot, and £23m more than rivals Sainsbury and Morrisons. None of the Tesco executive directors earned less than £1.8m.

The report notes that David Reid was the highest paid Tesco executive, making £8.6m last year, largely as a result of cashing in share options accumulated during his 20 years on the board of the grocery group. He became non-executive chairman during 2004.

Sir Terry Leahy, the chief executive, was paid £4.3m in cash and long-term incentives.

Average Tesco wages outside the boardroom were among the lowest in the survey. An analysis by the Guardian found that Sir Terry was valued the same as 335 of his employees.

The eight non-executive directors get paid between £44,000 and £72,000 a year for turning up to a few meetings.

At the 2004 Tesco AGM, Investor group Pensions Investment Research Consultants (PIRC) was critical of a proposed new incentive scheme. PIRC vowed to oppose rules which allow departing directors to claim average bonuses earned in the previous two years, which can add up to the equivalent of a year's salary. PIRC was also critical of executives' pay and bonus deals for 2003, although Tesco said its remuneration report was approved by 97.08% of votes cast. 7 In previous years, PIRC has been highly critical of Tesco directors’ pay as 'overgenerous' with 'inadequate performance targets'. PIRC was especially critical of directors’ two year rolling contracts which have now been renegotiated (See below).8

The seemingly fierce competition between companies who produce similar goods and services actually masks some close corporate interconnections. Directors often move seamlessly between companies and lobby groups – such as Michael Wemms, who left Tesco after nine years as their retail director to move to House of Fraser as chairman in 2001 and then on to the chairmanship of the British Retail Consortium. Tesco directors Richard Brasher and Tim Mason were both in the running for the top job at Sainsbury before the appointment of Justin King, previously head of food at M&S, was announced.9
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Sir Terry Leahy

'The only personality I believe in is Tesco'10

Terry Leahy, aged 48, joined Tesco as a marketing executive in 1979 and became chief executive in March 1997, taking over from Lord McLaurin. He rarely gives personal interviews, but it is known that he is the son of a Liverpool ship's carpenter turned greyhound trainer. He studied for a BSc in Management Sciences at UMIST in Manchester, is married to Alison, a GP, and has three children. Based in unpreposessing headquarters in Cheshunt, Hertfordshire, Terry, by all accounts, is just a very ordinary affable guy, who is totally, some say obsessively, committed to the Tesco project. He drives his own car to work, doesn't keep a large support staff, and won't take outside directorships because he believes being 'chief executive of Tesco is a full-time job'.11 Nevertheless, Tesco shareholders have seen their holdings double since Leahy took over in 1997.

He ascribes Tesco's phenomenal success under his leadership to his policy of 'listening to the customer'. Though every company claims to listen to its customers, genuinely doing so requires a humility that is rare in senior management. Commentators claim that Leahy has it in spades. Raised on a Liverpool housing estate, Mr Leahy first stacked shelves in a Tesco store for a summer job. He claims 'I've been fortunate enough to see all layers of British life...I feel I know personally all our customer groups.'12

Leahy very much believes that customers vote with their feet. 'We're selling 50% more food than we did five years ago; we're the biggest customer of British farming there is and we've created 100,000 jobs in the last five years'. As Chris Blackhurst in Management Today says, 'It's those values that tell him he's right to fight the farming and corner-shop lobbies...Some farmers who can't match the quality he demands and some cornershops that can't compete may go out of business, but so what?'13

Leahy was knighted in the New Years Honours list 2002 for services to food retailing, and in 2002 was also appointed Chancellor of UMIST. In October 2001, Leahy was awarded the Freedom of the City of Liverpool, his home town. He is apparently a fanatical Everton supporter.

Much to his shareholders' chagrin, Leahy had been holding onto a two year-rolling contract that would have paid up to five times his salary or £4.5 million if he were ousted in a takeover or sacked. The Board of Directors had felt that the shareholders were getting 'value for money' from Leahy, but at the 2003 AGM, 40% of Tesco's shareholders illustrated just how strongly they felt when they voted against or abstained from the vote on the length of Sir Terry's notice period. In March 2004, Leahy finally caved in, accepting a one year rolling contract.

In January 2004, Leahy was named European Businessman of the Year by Fortune Magazine.

For more information on Terry Leahy, see 'Influencing Government' section.



  • Stockbrokers: Deutsche Bank A + G London
  • Morgan Stanley + Co International
  • Auditors: PriceWaterhouse Coopers
  • Lawyers:(among others) Freshfields Bruckhaus Deringer14
  • Registrar:Lloyds TSB Registrars,
    The Causeway, Worthing, West Sussex BN 99 6DA
    01903 502541 15



Tesco has 150 subsidiaries, around half of which have 'Tesco' in their name and are based in Cheshunt. Please contact Corporate Watch if you want more information. Readers should be aware of Tesco Corporation, which is an energy and oil company and is not related to Tesco PLC.

As part of its acquisition of T&S stores, Tesco acquired Dillons the newsagents. The Dillons chain includes 180 stores selling newspapers, tobacco and grocery items. In July 2004, Tesco was believed to be discussions to sell Dillons to private convenience store chain TM Retail, who own Forbuoys and Martins.16

Matalan, the membership-based clothing and home furnishing retailer has been struggling through 2003/2004, and rumours have been flying for some time that Tesco may be interested in a merger.17 Asda is also rumoured to be about to make an offer (August 2004)

In a Telegraph article published in 1999, it was suggested that Tesco and the other supermarkets were on the verge of submitting bids to take over the running of the 103 very basic grocer's shops inside British prisons. Hence capturing the spending power, all £10 a week on average, of British prisoners’ wages from cooking and cleaning etc.18 While this does not seem to have happened, it is interesting that Tesco and the other major British supermarkets have not actively been tendering for contracts in the public sector – e.g. running shops in hospitals.

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1. www.economist.co.uk/research/backgrounders/displaystory.cfm?story_id=730271
viewed 8/7/04

2. www.tesco.com/corporateinfo Information is updated every four weeks.

3. Annual Review and Summary Financial Statement 2004

4. Lex: Tesco in The Financial Times 22/9/04

5. From www.tesco.com/corporateinfo unless otherwise stated

6. '£26m puts Tesco at the Top of the Table' The Guardian 27/08/04

7. ‘Tesco sales surge above forecasts’ 18/6/04 http://news.bbc.co.uk/1/hi/business/3817815.stm viewed 8/7/04

8. ‘Tesco targetted over 'Fat cat' pay’ 20/5/03 http://news.bbc.co.uk/1/hi/business/3045143.stm
9. www.telegraph.co.uk/money/main.jhtml?xml=/money/2003/
11/16/cnsains16.xml viewed 1/9/04

10 'Sir Terry Leahy' Management Today February 2004

11. ibid.

12. 'Leahy's Lead' 9/8/01 The Economist www.economist.co.uk/research/backgrounders/displaystory.cfm?story_id=730271
13. ibid.

14. www.freshfields.com/news/dynamic/Pressrelease.asp?newsitem=258
newsitem=258 viewed 8/7/04

15. www.tesco.com/corporateinfo
16. 'Tesco: Selling Dillons, partnering e-Diets' www.just-food.com 26/7/04 viewed 26/7/04

17. http://business.scotsman.com/retail.cfm?id=784612004
18. 'Supermarkets strive to get into prison' By David Bamber, Home Affairs Correspondent The Telegraph 19/9/99