Events | 2009.07.03
Union protest angers Tesco chief
• Changes to share option scheme attacts significant protest vote
• Unite demands better treatment of agency workers in UK meat factories
Tesco came under fire from both investors and union leaders at a fiery annual general meeting in Glasgow today, with changes to the retailer\'s share option scheme attracting one of the biggest protest votes the City has seen.
Investors have become increasingly militant since it became clear the City "bonus culture" was partly to blame for the financial crisis, with the current AGM season filled with challenges over executive pay.
Tesco\'s desire to extend the period during which leaving or retiring executives can exercise their share options from one to three years met with only narrow approval, with 45% of its shareholders either rejecting or abstaining over the plan. In City terms, anything over 10% against is considered significant, even if that disapproval is registered as an abstention.
A resolution requisitioned by Unite, Britain\'s largest union, demanding better conditions for agency workers in the meat factories that supply Tesco, also won considerable backing, with 18% of shareholders showing their support. Within that figure, 11% of shareholders voted in its favour – more than double Unite\'s expectations – while a further 7% abstained, which the union also counted as its own. The special resolution required a 75% vote in its favour to be carried.
It was a similar outcome to last year\'s campaign, led by celebrity chef Hugh Fearnley-Whittingstall, to improve the welfare standards of chickens, which saw 9% of shareholders support the motion and another 10% abstain.
Protest votes are the latest sign that investors are prepared to speak out against company boards, which they have traditionally been reluctant to do – particularly over pay. Royal Dutch Shell and BP are among the companies that have been singled out, while Home Retail Group saw 43% of its investors either vote against or abstain over its new executive bonus scheme at its AGM on Thursday.
Tesco had argued that "good leavers" were prey to stockmarket volatility under the previous share options scheme, as they had to exercise their options within a year of departure. But RiskMetrics, the investor advisory service, had urged shareholders to block the proposition, as creating such a long time gap was "not in line with best practice recommendations".
Up to 50 Unite members, some of them wearing chicken suits, protested outside the meeting at Glasgow\'s exhibition centre. Unite\'s deputy general secretary, Jack Dromey, said there was "disturbing evidence" of discrimination within the meat processing industry, with agency workers – who are predominantly economic migrants – paid less than permanent staff. As market leader, Dromey said, Tesco had a duty to "lead and not lag" on an issue that was causing racial tension in xsome communities.
The Equality and Human Rights Commission is already investigating the issue, which Unite says stems from the way supermarkets order food at short notice and put pressure on suppliers to cut costs. However Tesco argues that this is an industry issue rather than a Tesco-specific one. "This is not a question of labour relations within Tesco," said the company\'s chief executive, Sir Terry Leahy. "You have to accept that when we\'re talking about workers in other privately owned companies we\'ve crossed a boundary." He also said Unite had not provided Tesco with hard evidence to substantiate its claims.
The United Food & Commercial Workers International Union (UFCW) of America also used the meeting to air its grievances. Relations between Tesco and the union have been tense since the chain announced its ambition to enter the US market more than two years ago. UFCW director Michael Bride accused Tesco of "union-busting" tactics, claiming the retailer "refused to engage with the union" while managers at its Fresh & Easy US chain sought to block workers from forming chapels.
Leahy hit back at this charge, saying: "Your union has accused us of bad labour practices and tried to destroy our business before we\'d even opened a shop or taken a dollar."
Referring to the company\'s relationship with the Union of Shop, Distributive and Allied Workers in the UK, Leahy said: "We do work with unions." The retailer will create 26,000 jobs this year, including 11,000 in the UK.
Leahy told the UFCW: "Your deeds do not match your words. Your words are conciliatory but your deeds are aggressive and seek to undermine our business."
The audience of about 300 small shareholders – many of whom were celebrating this year\'s near 10% hike in the dividend over a generous buffet lunch – seemed bemused by the tenor of the debate, with many clapping the board\'s responses.
"I think Tesco is a good corporate citizen," said Roger Weizer, a retired fashion retailer who had travelled up from London for the event. "I am more interested in Tesco as a British success story, forging ahead in the Far East and Europe.
Leahy said the retailer, which made profits of £3bn last year, had encountered "some of the toughest conditions it had ever seen" during the period. He also trumpeted the group\'s green credentials, with plans to open its first carbon-neutral store in Ramsey in Cambridgeshire and have carbon-labelling on 500 products by the end of this year. He refused to comment on speculation that named Tesco as a potential acquirer of the state-owned mortgage lender Northern Rock .
For more information, please visit
http://www.guardian.co.uk/business/2009/[...]co-trade-unions-workers-rights
