Tesco’s AGM today saw the largest against vote (41.03%) against a share plan at a FTSE 100 company since Manifest began collecting voting data in 1996. When analysed including abstentions, it was the largest rebellion in the FTSE 100 in 2009 and the biggest since Royal Dutch Shell in May 2008. At Shell however, votes were almost equally split between abstentions and against votes.

The controversy arose due to perceptions by many investors of a divergence of interests between ‘good leavers’ and investors .

The resolution proposed changes to the 2004 Plan with regards to how awards belonging to employees leaving the Company before the end of a given performance period are treated. Presently, ‘good leavers’ holding options for less than three years may exercise those grants to the extent that performance targets have been met to the date of their leave. The holders of these grants then have 12 months in which to exercise their share options before their lapse.

The revised terms allow the performance conditions to be judged over the whole of the original period, after which the leaver will have three years to exercise any vested option grants. The Remuneration Committee may choose to apply the revised terms to option grants already outstanding.

The Company said that these revised arrangements will avoid the need to make an assessment, part way through a performance period, of the extent to which the performance target has been satisfied and will allow good leavers a reasonable period of time to exercise their options’.

On the shareholder proposal regarding ethical working practices, the level of dissenting votes was marginally lower than last years resolution on chicken welfare. 10.43% of shareholders supported the resolution with 6.96% submitting abstentions – giving total dissent of 17.39%. Last year, the chicken welfare resolution saw 8.92% vote in favour with 9.76% submiiting abstention – total dissent of 18.68%.

Last Updated: 3 July 2009