Tesco : Companies Act Section 430(2B) statement – Philip Clarke

As announced previously, Philip Clarke will be stepping down from the role of Chief Executive Officer and as an Executive Director of Tesco Plc with effect from 1 October 2014 when David Lewis will become Tesco's new Chief Executive Officer. Philip Clarke remains an employee of Tesco until 19 January 2015. The following arrangements will apply in respect of Philip's employment and remuneration:

1. For a period of 6 months Philip Clarke will be employed on his existing terms. He will continue in his role as Chief Executive Officer until the arrival of David Lewis. Thereafter he will perform transition activities and support a handover to David Lewis. At the end of this 6 month period on 19 January 2015, he will cease to be employed by Tesco.

2. On ceasing to be employed by Tesco, in accordance with the terms of his contract of employment with the Company, Philip Clarke will be entitled to receive £1,217,000, calculated as:

(a) Base salary of £1,145,000;
(b) Payment in lieu of prescribed benefits of £72,000 comprising car and car related benefits.
(c) No additional amount will be paid in respect of pension.

3. Incentives: Philip Clarke's existing share incentives benefits will be treated in accordance with the rules of the applicable plans and will remain subject to the terms contained therein and relevant performance conditions being met.

a) Long Term Performance Share Plan (PSP): Awards made in 2012 & 2013 shall lapse on the termination date of 19 January 2015. Award made in 2011 lapsed as the performance conditions were not satisfied. Awards made in 2008 and 2009 have already vested and may be exercised subject to the provisions of the rules. The value applying the closing share price on 21 July 2014 of £2.8865 is £1,484,440.
b) Executive Incentive Plan: Awards made in 2010 and 2011 have already vested and may be exercised subject to the provisions of the rules.  The value applying the closing share price on 21 July 2014 of £2.8865 is £1,196,642.  No EIP awards were made to Philip in 2012, 2013 and 2014.
c) Discretionary share option plan awards made in 2005, 2006, 2007, 2008 and 2009 can be exercised within 12 months of the termination date of 19 January 2015, but all options are currently underwater, so have a nil value.
d) Shares / options held under the all-employee Share Incentive Plan and Sharesave may be released / exercised in accordance with the rules of the plans.

4. In light of his 40 years' service, the Board has agreed, in addition, that Philip Clarke will be entitled to health cover for himself and his wife for life.  In line with Company policy he will also retain his staff discount for life.