Tesco to Incentivize U.S. Executives: Report

ELLIOT ZWIEBACH

LONDON — Tesco here is implementing a special bonus for Sir Terry Leahy, its chief executive officer, and incentives for other Tesco executives involved in the company's expansion into the U.S. with its Fresh & Easy Market format, according to published reports here. The incentive plan — reportedly linked to profitability of the U.S. venture based on return-on-capital-employed — will deliver Tesco shares to Leahy and any U.S.-based executives who opt to participate, the reports said. According to an article in yesterday's Financial Times of London, "The decision by Tesco's board to create a new incentive plan dedicated solely to its U.S. arm underlines the importance of the American launch for the U.K. chain." Tesco is quoted as saying it felt it needed the plan "to ensure it could attract great talent" for its U.S. operation. Since Leahy is overseeing the expansion to the U.S., he is eligible to participate in the plan, along with U.S.-based executives. Leahy could get up to 2.5 million shares as a one-time award if Fresh & Easy hits its ROCE targets, the newspaper reported; other executives could earn shares if ROCE hits 4% to 6% in 2010-2011 and 10% to 12% in 2013 and 2014, the paper reported.

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