A big pay squeeze hits major industry execs

As Tesco hit the headlines this week for offering unpaid work experience to jobseekers, executives at the top of the food chain have seen their own pay fall.

The total comparable pay packages of incumbent executive directors at Tesco, Sainsbury’s and Morrisons fell 13.1% to an average of £2.09m in 2011, according to data commissioned for The Grocer by research company Morningstar.

Pay dropped the most in the Sainsbury’s boardroom, where CEO Justin King’s remuneration fell 20.7% to £2.66m. King’s salary remained unchanged at £900,000 but his bonus fell more than 50% after he missed sales and other targets.

The pay cuts across the supermarkets were the result of smaller bonuses and lower share option rewards. Average base salaries actually edged up 4.9% to £754,625.

Meanwhile, among FTSE-listed food and drink suppliers, only execs at Diageo, SAB Miller and AG Barr had higher pay cheques in 2011 than 2010.

Diageo CEO Paul Walsh saw the biggest rise, receiving £5.07m in 2011 compared with £3.18m the year before. His pay rose after Diageo successes in emerging markets helped its share price rise 39% to 1,500p since early 2010.

However, execs at ABF, Unilever, Hilton, Cranswick, Dairy Crest and Britvic all saw their pay fall. The average executive pay package fell to £739,417 in 2011 from £1,031,379 in 2010.

Among big names to take a cut were Unilever CEO Paul Polman, whose total remuneration fell 11.1% to £2.47m, and ABF CEO George Weston, whose pay was cut 37.7% to £1.34m.

Although most executive directors took home less in 2011, Unite national officer for food and drink Jennie Formby said some were still earning in a week three times what many of their staff earned in a year.

“Thousands of workers in retail and food manufacturing depend on benefits to supplement their low pay,” she said. “This means the taxpayer is subsidising hugely successful companies.”

This week, Tesco, which gave ex-CEO Sir Terry Leahy a £12.04m send-off and paid out £13.86m to its incumbent executive directors in 2011, offered to pay jobseekers on the Workfare scheme.

After coming under fire for offering four weeks’ unpaid work experience to young people, Tesco said it would offer paid placements instead and guarantee a job if the trial went well.