Tesco show what performance related pay really means

May 27, 2009 11:07 AM

Too often in the public sector, and in many private companies, bonuses are paid out year in, year out to executives presiding over failing organisations or according to targets that don't really reflect ambitious expectations of performance.


Sir Terry Leahy, Chief Executive of Tesco is not presiding over a failing organisation. Far from it. Tesco has made record profits of £3 billion in the last financial year, beating City forecasts.  Despite that, his pay has fallen this year.  He's still paid a massive amount, £5.1 million, but that's down from around £5.5 million a year earlier.


The reason is that, despite the company's strong overall performance, Tesco has failed to hit certain targets for its new chain in the United States, which has struggled in a tough economic climate over there.  As a result, Sir Terry Leahy's bonus has been cut significantly.


What a difference to the rewards for failure that we see in too many cases throughout the Public Sector Rich List (PDF).

Too often in the public sector, and in many private companies, bonuses are paid out year in, year out to executives presiding over failing organisations or according to targets that don't really reflect ambitious expectations of performance.


Sir Terry Leahy, Chief Executive of Tesco is not presiding over a failing organisation. Far from it. Tesco has made record profits of £3 billion in the last financial year, beating City forecasts.  Despite that, his pay has fallen this year.  He's still paid a massive amount, £5.1 million, but that's down from around £5.5 million a year earlier.


The reason is that, despite the company's strong overall performance, Tesco has failed to hit certain targets for its new chain in the United States, which has struggled in a tough economic climate over there.  As a result, Sir Terry Leahy's bonus has been cut significantly.


What a difference to the rewards for failure that we see in too many cases throughout the Public Sector Rich List (PDF).

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