Industry News

Tesco (LSE: TSCO.L - news) , Britain's biggest retailer, suffered an unusual rebuff from shareholders on Friday when more than 42 per cent of investors voted against changes to its share option scheme.

The issue was not raised at Tesco's annual meeting in Glasgow, but Riskmetrics, the investor advisor service, had urged shareholders to oppose the changes, which extend to three years the one-year period in which leaving or retiring executives can exercise share options.

After the motion had been passed by 57.23 per cent of votes to 42.77 per cent, Lucy Neville-Rolfe, Tesco's corporate and legal affairs director, insisted the company had done the right thing.

She said: "We have shareholders right down to store manager in Tesco. Because of the volatility of the markets, if they are retiring, or retiring for ill-health reasons - or even if there is redundancy - it means they lose out in the current market because they only have one year to exercise the options."

However, Tesco won the support of 88.79 per cent of shareholders in rejecting a call by the Unite trade union for the retailer to improve working conditions for employees in the UK and Irish meat industry that supply the retailer.

Jack Dromey, deputy general secretary of Unite, said: "Others are moving - you are the biggest, but you are the slowest. As the market leader, you should lead."

But David Reid, Tesco chairman, said: "We do not own or control these companies - your desire to recruit in the meat industry is a matter for you."

Shares in Tesco were flat at 350.9p in afternoon London trading.