Tesco boss Ken Murphy set to be rewarded with £10million salary after riding after huge rise in Clubcard customers and online sale surge

The Tesco boss is in line to bag a £10million payout this year in an unprecedented sum for the supermarket giant.

Ken Murphy, 57, landed the job of Chief Executive three-and-a-half years ago and is set for a big reward.

This is due to a huge rise in Clubcard customers and a surge in online sales. 

Just over half of the £10m will come from a share-based bonus worth £5.1m in June.

That is on top of his salary of £1.4m and his bonus which is expected to be up to £2.5m, according to The Times.

But this comes amid the cost of groceries rising steeply and many families are struggling to feed themselves due to cost of living.

However some believe he deserves the record payout because he saw Tesco through the Covid pandemic.

Richard Hyman from Thought Provoking Consulting told The Times Murphy has done a 'terrific job'.

Not too long ago, the chain was associated with horsemeat and financial mismanagement - after it attempted to expand into America.

Murphy's predecessor also failed to tackle the soaring popularity of Lidl and Aldi after the 2008 financial crisis.

And in 2015, Tesco had a £250m black hole in its finances.

Murphy, who took over in 2020, is a rugby fanatic who began working in his father's shop aged just 15.

Tesco's online business has grown by over 60 per cent from pre-pandemic levels to £6.2billion sales a year. That means £1 in every £3 spent on groceries online is spent at Tesco.

Murphy's bonus - in the form of Tesco shares - pertains to the chain's financial performance in 2021. 

And his pay packet will only be the first of many. The Times reports that he will receive several share-based bonuses on top of his salary and regular bonus for the next two years. 

About 22 million of 28 million British households hold a Clubcard, and more than three quarters of transactions are made using them, The Times reported.

The Clubcard scheme offers discounts on thousands of items in the supermarket's stores and has proved popular during the cost of living crisis. 

This follows reports that annual profits at Tesco have surged 160 per cent to £2.3billion as millions of Britons struggled to afford food and farmers said they were in crisis.

The increase announced by the supermarket triggered accusations of profiteering amid the biggest cost of living squeeze since the Second World War.

Tesco confirmed that pre-tax profits increased from £882million a year earlier, when it had been impacted by an almost £1billion one-off impairment.

Britain's biggest retailer claimed its success was built on offering good value to shoppers in a year when food price inflation peaked at 19.2 per cent in March.

The rate of increase fell back to five per cent in February this year with hopes of further falls this year. But Tesco bosses say the figure could be 'sticky' given increases in the costs of coffee, cocoa, potatoes and some other veg due to the impact of flooding.

Millions of people have changed their shopping habits in response to the cost of living crisis by, for example, switching to cheaper own brands offered by Tesco.

At the same time, the Office for National Statistics (ONS) found poorer households have seen parents ration their own food intake, skipping meals, in order to put meals on the table for children.

Murphy previously said the supermarket had 'worked hard' to reduce prices for shoppers.

He pointed to the chain's Aldi Price Match scheme, plus its 'Low Everyday Prices' promotions and the discounts available to holders of its Clubcard.

Tesco said it cut prices on more than 4,000 products during the year, with an average drop of 12 per cent.

Mr Murphy said: 'Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we've made to the value and quality of our products.

'Inflationary pressures have lessened substantially, however we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year.'

He said Tesco is grabbing customers from premium rivals thanks to its Finest range where sales rose 15.7 per cent to more than £2billion.

Richard Hunter, head of markets at Interactive Investor, said: 'Tesco has again cemented its position as the pre-eminent grocer of the British aisles, driven by a relentless focus on both value and quality.

'It's appetite for lowering prices for customers is enabled by its sheer scale and strength.'