Philip Clarke and Laurie McIlwee to collect total of £2.1m despite accounting scandal
Tesco will make exit payments worth more than £2 million to ousted former directors Philip Clarke and Laurie McIlwee despite previously suspending the payouts in the wake of last year’s accounting scandal.
In a statement the employer said it was “contractually committed to make the relevant payment to each former director unless it can legally establish a case of gross misconduct against him”.
Plans to withhold separation payments worth £1,217,000 to Clarke, former chief executive, and £970,880 to McIlwee, former chief financial officer, were announced last October as part of the retailers interim results. The decision came after a whistleblower revealed the organisation’s profits had been overstated by £263m.
As a result the retailer’s share price dropped dramatically, wiping £1.5bn off its market value.
Tesco appointed accountants Deloitte and legal advisers Freshfields to investigate and the employer also spoke to the Financial Conduct Authority.
However, after taking legal advice, Tesco said it has “concluded that it does not have the basis for continuing to withhold the payments” from Clarke or McIlwee, and “the board considers that defending costly claims for the payments would not be in the company’s best interests”.
An investigation into the accounting practices that led to the huge overstatement of profits is still being conducted by the Serious Fraud Office. Tesco added: “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.”
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