Tesco was probably hoping the names Philip Clarke and Laurie McIlwee would disappear from public consciousness for a while as it tries desperately to revive its image and turn its finances around. No such luck.
Today the supermarket was forced to backtrack on a previous decision to withhold £2.1m worth of golden goodbyes previously promised to its former chief executive and chief financial officer after it emerged in October that profits were overstated by £263m, not the £250m announced a month earlier.
‘The company is contractually committed to make the relevant payment to each former director unless it can legally establish a case of gross misconduct against him,’ Tesco said in a statement today. ‘The company has taken legal advice and has concluded that it does not have the basis for continuing to withhold the payments.’
Clarke will receive £1,217,000 and McIlwee will bag £970,000 – sizeable amounts of cash but not enough to really have any bearing on the supermarket’s books. The real headache this causes for Tesco is one of public image – the perception that nobody has paid the price for what happened. Except for Richard Broadbent, the chairman who was forced to fall on this sword last year.
Of course Tesco doesn’t have much choice. Even the UK’s biggest private sector employer can’t just unilaterally decide to change the terms of a former employee’s contract, no matter how unhappy it is with their performance.
Tesco did leave the door open for further action. ‘The SFO continues to investigate the commercial income issue,’ it said. ‘If new information were to come to light which would change this assessment, the company will pursue recovery of the payments and damages and has fully reserved all its legal rights in this respect.’
Chances are, though, that Tesco would rather the Clarke and McIlwee era was now just laid to rest.