Ken Murphy Tesco Pay Rise 2026: CEO Receives Record £10.84m as Shareholders Approve Package

Tesco chief executive Ken Murphy received a record £10.84 million remuneration package for the 2025/26 financial year, up from £9.76 million in 2024/25.

The increase of approximately £1.08 million was driven mainly by annual bonuses, long-term share incentives and Tesco’s strong financial performance.

According to Tesco’s 2026 annual report, Murphy received £1.515 million in basic salary, £3.424 million in annual bonuses and £5.665 million through its Performance Share Plan, alongside pension contributions and benefits.

The Ken Murphy Tesco pay rise has attracted attention because of the difference between executive compensation and frontline employee earnings.

However, shareholders overwhelmingly supported the company’s remuneration arrangements at its Annual General Meeting on 18 June 2026, approving the remuneration report with 95.18% of votes cast.

For UK small business owners, the controversy raises important questions about performance-related bonuses, leadership accountability, employee pay ratios and how companies should reward success without damaging workforce trust.

How Much Is Ken Murphy’s Tesco Salary and Bonus in 2026?

Ken Murphy’s Tesco salary and remuneration package contain several components. His basic salary represents only a small proportion of his total earnings.

According to the Tesco Annual Report 2026, the breakdown is:

Remuneration Component	2025/26 Amount
Basic salary	£1,515,132
Annual bonus	£3,424,000
Long-term share incentives	£5,665,000
Benefits	£124,000
Pension allowance	£114,000
Total remuneration	£10,842,069

Figures are rounded by component. The total is Tesco’s exact reported single-figure remuneration.

The annual bonus reached 91.7% of its maximum opportunity. Half was awarded in cash and half in shares deferred for three years.

His salary for 2026/27 subsequently increased by 3% to £1,538,541. Tesco’s chief financial officer, Imran Nawaz, received an 8.2% basic salary increase to £900,000.

Melissa Bethell, Chair of Tesco’s Remuneration Committee, explained in the annual report:

The remuneration for our Executive Directors is closely tied to the strong performance of the business.

Her assessment demonstrates how large corporations connect executive compensation with financial and strategic performance rather than salary alone.

 

 Ken Murphy’s £10.84 million remuneration breakdown for 2025/26.

How Has Ken Murphy’s Tesco Pay Changed Over Five Years?

Murphy became Tesco’s chief executive in October 2020. His compensation has increased substantially, particularly following the vesting of long-term share awards.

Financial Year	Total Remuneration
2021/22	£4.745 million
2022/23	£4.443 million
2023/24	£10.243 million
2024/25	£9.763 million
2025/26	£10.842 million

The table uses the historical figures presented in Tesco’s 2026 annual report.

The 2023/24 remuneration was originally reported at approximately £9.93 million, while some earlier coverage placed 2024/25 at approximately £9.2 million. Subsequent share-award valuations led to restated figures.

This explains why different publications report different totals. Using Tesco’s latest annual report ensures a consistent comparison.

Across these five completed financial years, Murphy’s remuneration totalled approximately £40 million.

 

 Ken Murphy’s Tesco pay progression from 2021/22 to 2025/26.

Why Did Tesco Award Ken Murphy Such a Large Bonus?

Tesco’s financial results provide the principal commercial explanation.

During 2025/26, Tesco reported sales excluding fuel of approximately £66.6 billion, representing growth of 4.3%. Statutory operating profit increased by approximately 8.5% to £2.4 billion, while adjusted operating profit reached approximately £3.15 billion.

The company also benefited from its strong competitive position.

Tesco’s UK market share reached 28.5% at its February 2026 year-end measurement. A separate June 2026 market-share measure placed it at approximately 28.1%.

That represented a significant recovery from around 26.5% in 2020, although it remained below Tesco’s historical peak of almost 32% in 2007.

Tesco continues to pursue greater market share, with 30% an important strategic ambition. Competitive difficulties experienced by Asda and Morrisons have also helped create opportunities.

In May 2026, Interactive Investor reported Tesco’s shares had risen 26% to 480.6p over the measured period, delivering a total shareholder return of 33.1%. This provides context for why shareholders might support performance-linked compensation.

However, the commercial results should be considered alongside employee rewards and the sustainability targets attached to executive bonuses.

Why Did Tesco Remove Food Waste From Its Executive Bonus Targets?

One of the most important details in Murphy’s remuneration package concerns Tesco’s failure to meet its food waste reduction target.

The company’s 2023 Performance Share Plan assessed financial results alongside sustainability commitments.

Performance Measure	Maximum Weighting	Reported Outcome
Carbon reduction	8.3%	Full 8.3 percentage points
Food waste reduction	8.3%	Zero
Diversity and inclusion	8.3%	1.0 percentage point
Overall PSP vesting	100%	74.4%

Tesco achieved a 68% reduction in operational carbon emissions against the relevant baseline, exceeding its carbon-related target.

However, its reported operational food waste reduction was only 24%, against a minimum threshold of 51% for that incentive measure.

Consequently, Murphy received no award for the food waste component, contributing to the long-term incentive payout being nearly a quarter below the maximum.

For the 2026 Performance Share Plan, Tesco removed food waste reduction and introduced a 10% weighting for market share.

The company maintains that food waste reduction remains strategically important.

For small-business owners, the governance lesson is significant: performance targets should be measurable, challenging and consistently applied. Changing an incentive measure requires a clear commercial explanation, particularly when the previous target was missed.

 

Tesco’s food waste, carbon reduction and diversity performance measures.

How Does Tesco CEO Pay Compare With Tesco Worker Pay?

The comparison between Ken Murphy’s remuneration and ordinary employee earnings is central to the debate.

Tesco’s 2026 annual report confirms that Murphy earned 420 times the total remuneration of the median UK employee.

Pay Comparison	2025/26
Ken Murphy’s total pay	£10,842,069
Median UK worker’s total pay and benefits	£25,830
CEO-to-median-worker ratio	420:1
CEO-to-lower-quartile-worker ratio	436:1
CEO-to-upper-quartile-worker ratio	385:1

The median ratio increased from 373:1 in 2024/25. It was 431:1 in 2023/24.

The High Pay Centre criticised the scale of executive pay inequality in 2024. Its executive director, Luke Hildyard, questioned whether such substantial differences reflected a fair distribution of economic rewards.

That criticism belongs to the earlier remuneration controversy, rather than being presented as a new 2026 statement.

The 2026 figure of 420:1 is independently established by Tesco’s current report.

 

 Tesco’s CEO-to-employee pay ratio, showing the 420:1 median comparison.

How Much Bonus Did Tesco Employees Receive Compared With Ken Murphy?

Tesco announced a £65 million special performance award for eligible UK and Republic of Ireland colleagues outside its existing bonus arrangements.

The award was equivalent to 1.25% of pay, averaging approximately £347 for a full-time colleague.

Tesco also implemented a 5.1% increase in its UK hourly colleague pay rate.

These employee rewards are materially different from Murphy’s £10.84 million total package, but they should not be confused with annual base salary.

The wider wage competition across supermarkets is also reflected in the Morrisons employee wage increase, which introduced staged improvements for customer assistants during 2026.

For smaller retailers, the challenge is maintaining competitive wages while controlling operating costs.

Did Tesco Shareholders Approve Ken Murphy’s Pay Rise?

Yes. The 18 June 2026 AGM confirmed substantial shareholder support.

Tesco’s remuneration report received 95.18% approval, while Murphy was re-elected as a director with 99.46% support.

Historical voting results provide useful context.

AGM Year	Remuneration Report Votes in Favour
2020	32.71%
2024	93.49%
2025	96.97%
2026	95.18%

In 2020, shareholders rejected Tesco’s remuneration report following concerns about adjustments to the performance comparator group used for an earlier executive incentive award.

The outcome demonstrates that shareholder approval cannot be assumed, even when a company performs strongly.

Nevertheless, the June 2026 vote shows that most voting shareholders accepted the company’s latest remuneration decisions.

The complete figures are available through Tesco’s official 2026 AGM voting records.

What Can Small Businesses Learn From Tesco’s Executive Bonus Structure?

Small businesses do not need multi-million-pound incentive arrangements to benefit from performance-related remuneration.

A practical bonus framework should connect additional rewards with measurable business outcomes.

For example, a company employing 10 people might introduce a £3,000 annual management bonus based on profitability, customer retention and operational efficiency.

A larger business employing 50 people could establish departmental targets linked to revenue growth, customer satisfaction and employee retention.

The important principles include:

• Set measurable targets before the performance period begins.
• Establish a maximum bonus budget.
• Connect rewards to profit and sustainable cash flow.
• Explain eligibility and assessment criteria.
• Review outcomes consistently.
• Avoid rewarding short-term sales growth at the expense of long-term stability.

Businesses must also maintain accurate payroll records and apply employment law correctly. This is particularly relevant when managing bonuses, overtime and changing wage rates, as highlighted by HMRC payroll compliance checks.

How Can a Small Business Calculate Its CEO Pay Ratio?

A simple pay ratio compares the highest-paid executive’s annual remuneration with the median employee’s remuneration.

Pay ratio = Executive total annual pay ÷ Median employee total annual pay

Consider two illustrative businesses.

Business	Director’s Total Pay	Median Employee Pay	Ratio
10 employees	£90,000	£30,000	3:1
50 employees	£180,000	£36,000	5:1

These are hypothetical examples, not industry benchmarks.

For a meaningful calculation, employers should compare equivalent definitions of total remuneration and treat benefits and bonuses consistently.

A higher ratio does not automatically demonstrate unfairness. Job responsibilities, commercial risk and business profitability also matter.

However, calculating the ratio can help identify substantial differences that may require explanation.

Do Small UK Businesses Have to Report Executive Pay Ratios?

UK CEO pay-ratio disclosure generally applies to UK-quoted companies with more than 250 UK employees under the relevant corporate reporting regulations.

Most privately owned small businesses are not required to publish CEO-to-worker pay ratios.

Separately, gender pay gap reporting generally applies to employers with 250 or more employees on the relevant annual snapshot date. These are different reporting obligations.

All businesses must comply with applicable minimum wage legislation.

From 1 April 2026, the National Living Wage for employees aged 21 and over increased to £12.71 per hour.

Employers should regularly review their obligations rather than assuming small-company exemptions apply to every aspect of employee remuneration.

Should Small Business Directors Take Salary or Dividends?

For owner-managed limited companies, remuneration decisions involve different considerations from Tesco’s executive salary arrangements.

A salary is normally processed through PAYE and may attract Income Tax and National Insurance. Qualifying salary costs can generally reduce taxable company profits.

Dividends represent distributions of available company profits to shareholders. They are not deductible business expenses when calculating Corporation Tax.

A director can receive both salary and dividends, provided the company follows the relevant legal and tax requirements.

The appropriate arrangement depends on profitability, ownership, National Insurance, personal tax circumstances and pension planning.

Business owners should seek qualified tax advice before changing their remuneration structure.

How Should Small Business Owners Respond When Employees Question Executive Pay?

National executive-pay headlines can influence employee expectations, particularly when workers are facing financial pressure.

A small-business employer should respond to pay concerns using transparent commercial information rather than dismissing comparisons.

Employers can explain the company’s pay-review timetable, salary benchmarks, profitability constraints and opportunities for progression.

Where significant leadership bonuses are awarded, it is useful to explain how the relevant performance targets were achieved.

However, explaining executive compensation should not replace a genuine assessment of employee pay.

An employer offering a competitive salary, reliable working conditions and credible opportunities for progression may be better positioned to retain staff than one relying on vague assurances about future rewards.

Conclusion

Ken Murphy’s Tesco pay rise illustrates the increasingly complex relationship between executive reward, commercial performance and employee expectations.

His £10.84 million package reflects substantial performance-related incentives, strong business results and share-price appreciation.

Although the 420:1 CEO-to-median-worker pay ratio raises questions about compensation inequality, shareholders approved Tesco’s remuneration report with overwhelming support in June 2026.

For UK small businesses, the central lesson is not to replicate Tesco’s executive pay structure. It is to establish fair, affordable and measurable reward arrangements that recognise performance while maintaining employee trust.

Frequently Asked Questions

How much did Ken Murphy earn at Tesco in 2026?

Ken Murphy received total remuneration of £10.842 million for 2025/26, including basic salary, annual bonuses, long-term share incentives, benefits and pension contributions.

Did shareholders reject Ken Murphy’s pay package?

No. Tesco’s 2026 remuneration report received 95.18% support at the AGM on 18 June 2026.

What is Tesco’s CEO-to-worker pay ratio?

Tesco reported a CEO-to-median-employee total remuneration ratio of 420:1 for 2025/26.

Can small businesses legally pay directors more than employees?

Yes. There is no general statutory cap on UK director-to-employee pay ratios, although employers must comply with relevant employment, tax and reporting obligations.