Tesco's former finance director to receive £1m payoff

26th Sep 2014 09:49

Tesco's former finance director, Laurie McIlwee will receive a £1m farewell payoff next week, despite the latest scandal surrounding the retail giant.McIlwee, who left Tesco in April and was told to stay away from the office, will receive his payoff as stipulated in his contract, even though he received over £400,000 during the six months after his resignation.The "transition" period ends next Friday when McIlwee will officially cease to be a Tesco employee and, as such, he'll be entitled to a "termination payment" of £970,800, which includes a year's salary of £886,420 as well benefits such as private healthcare and a car worth £84,460, according to official figures released by the company.On Monday the company admitted that profits for the first half of its financial year were likely to be £250m less than previously estimated, due to suspected mishandling of payments from suppliers, while Tesco shares have lost 15% of their value this week.Some shareholders criticised McIlwee's decision to leave his post, suggesting that it contributed to the glaring financial mistake which saw £2bn wiped off the company's market on Monday."It seems unbelievable that a retailing colossus like Tesco should not have a full-time finance director overseeing everything," said Adrian Bailey MP, chairman of the Commons business select committee.On Thursday, Bailey suggested that the "merry-go-round" of directors could have contributed to the crisis crippling the retailer giant and Bailey is considering whether to launch a wider inquiry on procedures in the grocery industry following the fallout from Tesco.A watchdog was established in 2013 to oversee the relationship between big retail chains and their suppliers but Bailey insisted the latest crisis at Tesco confirms the industry is far from healthy."The Groceries Code Adjudicator was to try and get a fairer balance of power between suppliers and retailers," he said."If they are being forced to provide income or bonuses to suit the accounting regime of retailers,that is a matter of some concern. We will look at the outcome of the investigation, but if we think it is a whitewash we will have to ask what is going on."Retailing analyst and consultant Nick Bubb warned that Tesco has been suffering as a result of being overexposed to a store format."Consumers aren't doing so many big weekly grocery shops anymore, because of the rapid shift to online and convenience store shopping, whilst a lot of non-food spending has moved online, so the big out of town "hypermarkets" (with their big non-food presence) face a double whammy," Bubb said in a note on Friday."Tesco is vastly over-exposed to this store format and it is clearly here where they are haemorrhaging the most sales."The inevitable result is that Tesco will soon have to start closing some of these Tesco Extra stores and write down the carrying value of the rest."Tesco shares were down 0.62% to 191.43p to 10:56 on Friday.