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The Market Tracker team review recent developments that have impacted the supermarket chain, Tesco, and explores how these events influenced shareholder voting at its 2023 AGM.

Tesco Chairman steps down

On 16 June 2023, Tesco its resolution to re-elect Chairman John Allan at the company’s AGM after he from the position. Allan’s resignation followed allegations made in April that more than a dozen women were victims of sexual misconduct by senior members of the Confederation of British Industry (CBI), an organisation where he served as president from 2018 to 2020 and vice-president throughout 2021.

Allan was personally accused by four women of inappropriate behaviour, three of which allegedly occurred at CBI events and one at Tesco’s 2022 AGM. Allan ‘±¹±ð³ó±ð³¾±ð²Ô³Ù±ô²â’ rejected claims of non-consensual touching but did admit to making some unsolicited comments. Tesco emphasised it had of the 2022 AGM complaint in question and stated in a dated 19 May 2023 that ‘while we have received no complaints about John's conduct and made no findings of wrongdoing, these allegations risk becoming a distraction to Tesco.’ Byron Grote, longstanding Senior Independent Director of Tesco, was appointed the new Chairman on 16 June 2023 with immediate effect.

Allan will also as Chairman of property development company, Barratt Developments (Barratt), on 30 June 2023 at the request of the Board.  Barratt said that the move was to ‘prevent the ongoing impact of the allegations against John from becoming disruptive to the Company.’ Allan received a significant no vote against his re-election at Barrat’s , primarily due to female Board representation falling below the target of 40% recommended by the Hampton-Alexander review, after his colleague, Nina Bibby stepped down. Comparatively, Allan appeared to celebrate the Tesco Board reaching the same target in the , as he wrote in the Chairman’s statement:

‘I am pleased that we continue to make progress on gender equality on the Board, reaching 42% female representation in line with our target. We remain committed to equality across our business and continue to work towards that goal.’

Allan has recently departed from this rhetoric, as he commented amid the CBI scandal that men in the business world are becoming increasingly ‘²Ô±ð°ù±¹´Ç³Ü²õ’ of working with women and need to apply an excessive amount of ‘³¦²¹³Ü³Ù¾±´Ç²Ô’ in their interactions as harassment claims mount. Allan argued this growing pressure has become a strain on working relationships with women as men feel they are under undue pressure.

Withdrawn resolutions remain a relatively rare occurrence, with the exception of 2020, when they hit a record high of 18%, due to 13% of companies withdrawing resolutions to approve a final dividend. This year to date, there have been four other withdrawn resolutions at FTSE 350 AGMs, all of which were in relation to the re-election of a director. All of the directors in question stepped down from the board with no associated scandal. In 2022, Market Tracker found that 1.8% of resolutions were withdrawn (FTSE 100: 3. FTSE 250: 2), compared to 2% (FTSE 100: 3, FTSE 250: 4) in 2021. During the 2022 season, only two of withdrawn resolutions were in relation to director re-election, while the majority of withdrawn resolutions in 2021 concerned director re-election. 

Claims of greedflation a nonstarter for Tesco shareholders

Tesco shareholders were happy across the board and showed no signs of resistance, despite the supermarket being accused of ‘greedflation’ - inflating prices during the cost-of-living crisis to boost its profits. Chief Executive Officer (CEO), Ken Murphy commented on this point in the noting that: 

‘We are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items.  There are encouraging early signs that inflation is starting to ease across the market, and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.’

The reports that the annual inflation rate for food and drink currently sits at 19.1%, compared to general inflation of 10.1%. Tesco and its peers are currently under from the Competition and Markets Authority (CMA) to determine whether ‘any failure in competition is contributing to prices being higher than they would be in a well-functioning market.’ The CMA has already found that skyrocketing fuel prices can not exclusively be attributed to ‘global factors’ like the invasion of Ukraine and the COVID-19 pandemic, in fact, the ‘weakening of retail competition’ is partly to blame for rising costs.

Tesco large store sales up by 9%, while online sales were up by 8%. Overall, Tesco celebrated strong performance with continued growth in market share year-on-year. Shareholder satisfaction at the 2023 AGM could reflect these positive results.

Market Tracker will continue to monitor developments in this space.