Are Tesco Executives Not Willing To Back Their Own Plans?

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Since Dave Lewis became the CEO of Tesco, shares in the company have fallen by a quarter and Tesco has reported a loss of £6.4bn. Dave Lewis has not yet bought any shares in the supermarket chain, despite being in charge for a year.

The lack of share purchases bought by the board has raised eyebrows amongst the corporate governance pressure groups and suggests that they are not willing to back their own plans for the future of Tesco.

Tesco has defended this by saying “To create alignment with shareholder interest, we have robust shareholding guidelines of four times base salary for our CEO and three times base salary for our CFO. Dave Lewis and Alan Stewart are on track to meet this requirement.”

Sarah Wilson, chief executive of shareholder group Manifest, said: “Institutional investors see director share ownership as a key alignment tool. What message does it send the markets if the directors are not prepared to invest their own capital but investors are expected to put everything at risk?”

The message here is clear and one that we don’t tend to come across with SME and OMBs. The concern of those businesses is tying in employees to the executives plans. There are a number of possible routes for incentivising such key employees and should you wish to discuss any of these in more detail please contact Pauline Rigby, Head of Corporate and Restructuring at Forbes Solicitors on 0800 689 0831 or email pauline.rigby@forbessolicitors.co.uk.

Pauline Rigby

About Pauline Rigby

Pauline Rigby is Head of the Corporate and Restructuring team at Forbes Solicitors. Pauline’s blogs cover a wide range of corporate issues, specifically areas including company formation, banking, joint ventures and shareholder matters, contractual matters and equity fundraising or investing.
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