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Last Updated: Wednesday, 7 April, 2004, 09:11 GMT 10:11 UK
Tesco boss gets shorter contract
Sir Terry Leahy
Sir Terry has overseen Tesco's rise to the top
Tesco has revealed that the contract of its chief executive Sir Terry Leahy has been reduced from the previous two-year deal to a rolling one-year deal.

The move - in-line with industry best practice - follows shareholder objections to the two-year contract.

Tesco, which Sir Terry has cemented as the biggest UK supermarket, announced the change in a letter to shareholders.

Sir Terry's basic salary in 2002/03 was 916,000, but he received 2.84m following bonuses.

He is said to have been fully in favour of the switch to a one-year contract.

A Tesco spokesman said: "This gets us into line with best practice".

Golden handshakes

At Tesco's annual general meeting last year up to 40% of shareholders failed to back the firm's remuneration report.

One investor said at the time that the board's arrangements were "an obscenity and out of touch with current thinking".

Two-year contracts for senior executives have become increasingly rare in corporate UK due to shareholder opposition.

Investors feel that directors on two-year deals stand to get higher payouts if they lose their jobs, something critics have dubbed "rewards for failure".

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