Fresh & Easy flop costs Leahy millions

Tesco's decision to pull out of the US is set to cost Sir Terry Leahy a pretty penny.

by Rebecca Burn-Callander
Last Updated: 03 Nov 2014
Usually, when you leave a company, you waive all rights to your share options. Not so Sir Terry Leahy. The clever so-and-so negotiated his way into keeping options on 2.89m Tesco shares when he retired in 2011 – worth £11.14m at today's share price.  However, these are linked to the performance of Tesco’s US venture, Fresh & Easy.

That’s the operation that is currently hemorrhaging cash, FYI.

Indeed, this Wednesday Leahy’s successor Philip Clarke is expected to confirm that he is pulling Tesco out of the US business completely. This means that Tesco will fail to hit the targets in the US required for Sir Terry’s shares to vest.

Poor old Terry.

Still, it’s a far more painful situation for Tesco itself. The cost of exiting the US business will lead to a writedown of an estimated £1bn. That on top of a slowdown in sales in the UK and disruption to the company's biggest international business in South Korea, where trading hours for supermarkets are being restricted.

As a result, Tesco is expected to post its first decline in annual profit for 20 years.

Poor old Tesco.

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