Tesco shareholders vote against CEO Lewis's £6.4m payday

Tesco suffered a heavy defeat at its annual general meeting as more than two-thirds of shareholder votes opposed a £6.4m payday for departing Chief Executive Dave Lewis.

The FTSE 100 retailer's remuneration report was rejected by 67.29% of votes cast by shareholders at the meeting. The non-binding vote was a bigger rebuff than expected - the result was said to be in the balance a few days ago.

Shareholders were unhappy about the inflation of Lewis's performance share plan (PSP) bonus from £800,000 to £2.4m when Tesco removed Ocado from a group of companies against which its performance was measured.

Tesco argued that Ocado, whose shares had quadrupled over three years, was increasingly a technology company and not a retailer after shifting its focus to selling know-how to retailers setting up online operations.

Tesco said it was disappointed by the vote and would discuss shareholders' concerns with them before publishing its remuneration policy for next year's meeting. Lewis, credited with reviving Tesco during six years in charge, will leave Britain's biggest retailer in October.

"Following recent engagement on our remuneration report with a number of our larger shareholders, we have been reassured that the majority agree that the overall outcome of the 2017 PSP award is proportionate given the outstanding turnaround delivered by management," Tesco said. "We recognise, however, that a significant number of shareholders had concerns with the principle of the committee's adjustment to the … comparator group."

CEO pay is back in the spotlight with hundreds of thousands of workers losing their jobs and many others taking wage cuts. Investors have told companies to be careful when making judgements on pay during a time of national emergency.