Tesco will stop withholding payoffs due to its former chief executive officer and chief financial officer as the aftermath of an accounting scandal at the UK’s largest supermarket company rumbles on.
The retailer will make the payments of £1.22 million to Philip Clarke and £970,880 to Laurie McIlwee, it said today in a statement on its website.
The former executives were entitled to the amounts under the terms of their contracts, though Tesco had been holding off after the discovery in September of accounting errors.
"The company has taken legal advice and has concluded that it does not have the basis for continuing to withhold the payments,” Tesco said in the statement.
“Accordingly, the board considers that defending costly claims for the payments would not be in the company’s best interests.”
Tesco said it would pursue recovery of the amounts should new information come to light that would change its assessment. The retailer says it’s obligated to make the payments unless it can prove a case of gross misconduct. Tesco hasn’t made any allegation of wrongdoing against either individual.
CEO Clarke was replaced in September by former Unilever executive Dave Lewis after a career at Tesco spanning more than three decades.
McIlwee announced his resignation as CFO in April last year amid reports of disagreements with Clarke and wasn’t required to work the final six months of his contract.
The UK’s Serious Fraud Office is more than three months into an investigation into overstated estimates that led Cheshunt, England-based Tesco to suspend some senior managers.
News by Bloomberg, edited by ESM
