Tesco chief executive Ken Murphy saw his total annual remuneration package surge to £10.8 million in the 2025-26 financial year, an increase of £1 million on the £9.8 million he received the previous year, according to the company’s latest annual report.
Murphy’s package comprised a £3.4 million annual bonus and £5.7 million in share awards. His basic annual salary will rise by a further 3% to £1.54 million from 24 May. Chief financial officer Imran Nawaz will receive an 8.2% increase to £900,000. Nawaz’s total remuneration for the 2024-25 financial year was £4.95 million, down from £5.1 million the previous year, the report shows.
How performance metrics drive executive pay
The remuneration committee, chaired by Melissa Bethell, has explicitly tied the chief executive’s bonus and long-term share awards to a range of company performance targets. Bethell said in the report that the pay of executive directors is “closely tied to the strong performance of the business” and that the policy is “comparable to other FTSE 50 companies”. She added that a significant portion of the total package was achieved because Murphy and Nawaz met or exceeded “challenging targets” in a competitive sector, creating value for all stakeholders.
For the current financial year, Murphy’s annual bonus will be linked to three metrics: profit growth, carbon reduction and market share performance. The company has set a goal for Murphy’s bonus that ties directly to reaching 30% of UK grocery sales. Tesco’s overall market share stood at 28.5% as of the end of February 2026, up 24 basis points, and had reached 28.4% in the first half – its highest level in over a decade. Figures from Worldpanel by Numerator put Tesco’s share at 28.1%, up from a low of 26.5% in 2020. A 30% target would still be below the company’s historic peak of almost 32% in 2007.
The long-term performance share plan (PSP) bonus, which forms the bulk of Murphy’s share awards, was paid despite the group failing to meet its target for reducing food waste by 50%. Tesco achieved only a 24% reduction in the 2025-26 financial year. The company is removing the food waste target from the three-year PSP scheme going forward. A Tesco spokesperson said the firm is “confident we will achieve our targeted 50% reduction (vs a 2017 baseline) by the completion of the 2025 performance share plan cycle” and that this allows the company “to evolve the 2026 PSP scheme to align to future strategic priorities, which will run to 2029.”
Company performance and financial strength
The pay increase follows a period of strong trading for the supermarket. Tesco reported earnings of £3.15 billion for the year ending 28 February 2026, up slightly from £3.13 billion the previous year. Adjusted operating profit came in at £3,152 million for the 52-week period to 22 February 2026, a 0.6% increase year-on-year. Sales, excluding VAT and fuel, grew by 4.6% to £66.6 billion, giving the company its highest market share in more than a decade.
Underlying the results, Tesco’s “Save to Invest” programme delivered £535 million in savings, helping to offset investments in customer value and cost inflation. Online sales grew by 11.4% in the UK, with the rapid delivery service Tesco Whoosh increasing by 51% and the premium “Finest” range reaching £3 billion in sales, up 15% year-on-year. The company also completed a £1.45 billion share buyback during the fiscal year and announced a final dividend of 9.7 pence per share, bringing the full-year dividend to 14.5 pence – a 5.8% increase. Tesco’s share price rose 23.9% over the past year. The company also benefited from interest income on approximately £700 million in proceeds from the disposal of its banking operations.
The financial year 2025-26 comprised 53 weeks, while the prior year was a 52-week period ending 22 February 2025.
Worker pay and the pay gap
Alongside the executive pay hikes, Tesco announced a 5.1% pay increase for workers across the business, which the company said represented an investment of more than £200 million. That followed a £65 million bonus shared between staff in stores, warehouses and customer engagement centres after the rise in sales and profits. Hourly-paid staff saw their rates increase from £12.02 to £12.45 from March 2025, with a further rise to £12.64 from the end of August – an above-inflation increase of 5.2% that amounts to an £180 million investment. According to Tesco, hourly-paid colleagues have received a 32% pay rise since April 2022, totalling over £900 million invested. The May 2024 increase to £12.02 was described as an “inflation-busting increase” by the trade union Usdaw.
The average pay rise for Tesco executive directors was 4.9%, just below the 5.1% increase for UK hourly-paid colleagues.
Legal troubles and equal pay claims
The pay details emerge days after Tesco suffered a setback in a lengthy legal battle over equal pay claims. The Court of Appeal threw out the supermarket chain’s challenge to the way an employment tribunal had been assessing the value of jobs carried out by its customer assistants. The ruling does not determine whether Tesco unlawfully underpaid store workers, but it resolves a major procedural dispute. The Court of Appeal upheld the tribunal’s approach of using Tesco’s training manuals and operational documents to establish job facts, rejecting Tesco’s attempt to rely solely on witness testimony or to argue that such documents were not determinative.
The Tesco claims involve close to 60,000 claimants, with approximately 34,000 relevant to the specific appeal. The central question – whether predominantly female store workers were underpaid compared with predominantly male warehouse workers – remains unresolved and is being heard in a separate Employment Tribunal. Tesco has acknowledged that any resulting liability from these claims “may be significant”, though it is too early to gauge the final impact. A separate equal pay case against fellow supermarket Morrisons opened earlier this month. Tesco is among a raft of major retailers facing unequal pay claims in the UK.
Food waste controversy and sustainability goals
Tesco’s failure to meet its food waste target is not its first setback in this area. In January 2024, the company was forced to correct its food waste reduction figures after it emerged that food waste claimed to have been sent for animal feed had actually gone to anaerobic digestion, meaning it still counted as waste. The originally claimed reduction of 45% was revised down to 18%. Tesco terminated its contract with the food waste processor involved and subsequently opened a new animal feed production facility in Chelveston, Northamptonshire, in April.
The company has pushed back its target for halving food waste across its own operations by five years, now aiming for a 50% reduction by 2030, in line with UN sustainability goals. In 2025-26, Tesco wasted 73,390 tonnes of food, accounting for 0.5% of all food it handled. Over 142,000 tonnes of surplus food was reported, with more than 50,000 tonnes redistributed to charities. Tesco’s 2026 Sustainability Report also highlights progress on emissions, healthier diets and renewable energy. The company aims to achieve net zero across its entire value chain by 2050 and in its own operations by 2035, and has already achieved 100% renewable electricity procurement across the group. On shareholder support, Tesco’s directors’ remuneration report was backed by 92.4% of shareholders at the 2023 AGM, and the underlying policy was approved by 92.0% the previous year.
