Tesco Staff Share £111 Million Payout

20/02/2006 - Up to 49,000 Tesco staff across the UK will be toasting success with a multi-million pound payout as two of its Save As You Earn share schemes mature, it was announced today.

The majority of staff have chosen to save their shares but many are cashing in as Tesco celebrates 25 years of staff sharing in its huge success.

With the Tesco share price now well over £3.00 many staff who joined the SAYE scheme just three years ago will already have doubled their money. Top savers, including checkout assistants, dot.com delivery drivers and managers, stand to net more than £5,300, a 59% return on investment – substantially higher than the low interest rates currently offered on savings accounts.

While many staff choose to splash their cash on exotic holidays, home improvements or romantic surprises, up to 65% opt to keep their shares, with many saving for their retirement or building up a valuable nest egg for a rainy day.

Tesco chief executive Sir Terry Leahy said: "I know how important our benefits package is to our people. At Tesco we offer fair pay, a great pension and the opportunity for staff to take a stake in the business. In recent years many staff have done this through Save As You Earn.

“I am delighted that so many staff choose to do this and so share in the success that they help to achieve through all their hard work. ”

Some of the 49,000 staff spending their cash this year include:

* Mary Janes, 59, from Southampton, plans to visit her daughter in Perth, Australia, using the £9,100 payout she will receive from her two SAYE share schemes. A customer assistant on the checkouts, Mary has been with Tesco for 19 years and saves £100 each month - split equally between a three-year and a five-year scheme. “I’ve been able to visit my daughter several times using these payouts, which are also a great way for me to save for my retirement.”

* Nathan Noble, 28, from Newcastle has been working as a general assistant at Tesco for 4 years. For the last three years he has put £10 into the SAYE scheme and is expecting a pay out of £750. He plans to use this money to pay for a well-earned holiday to Majorca.

* Dairy manager Paul Ward, 41, from Swansea is looking forward to getting his £3,800 payout from his SAYE scheme later this month. Paul has worked for Tesco for 11 years and has been putting £50 a month into his scheme for three years. Every year he takes the cash and last year he used it to pay for his wedding and honeymoon. This year he is taking his wife back to Spain, where they honeymooned, together with his kids (Emily aged 2, Bethany aged 5). He will be using any money left over from his payout for home improvements.

* Geraldine Nash, 55, from Norwich, is going on holiday to the Bahamas in March using her £5,400 payout from her SAYE scheme after putting £50 a month into her scheme for five years. The money left over will be put into her pension. She used previous payouts to fund an extension to the family home and for holidays. “As well as the SAYE scheme I also save with the Buy As You Earn scheme,” says Geraldine, who has been with Tesco for 17 years and recently moved from customer services to the new electrical help desk.

* James Hollywood, 39, from Dundee has been working for Tesco for 11 years and is a personnel manager. He has been putting £50 a month into his SAYE scheme for the last three years and expects to receive a £3800 payout when it matures this month. As a fanatical football fan, James is going to use this money to pay for a trip abroad to watch Scotland play in the 2008 Europe qualifiers with his mates. He is going to use the rest of the money to pay for a summer holiday to Greece.

Under the SAYE scheme, Tesco staff can set aside a fixed sum, between £5 and £50, from their salary every month for a three or five-year period. When the scheme matures they have the option to buy Tesco shares at a price set when they joined the scheme.*

Employees who joined the scheme five years ago can buy shares at the 2000 option price of £1.98 each, while those who joined the scheme three years ago can buy shares at the 2002 price of £1.59. Staff are then free to sell their shares at a profit or keep them as a long-term investment.

The popularity of SAYE has increased 100 fold in the 25 years since it was offered to staff. Then, just 942 employees signed up to the scheme while today more than 96,000 benefit from the annual payouts. The total number of applicants received in 2005 was 69,154.

Ends

Notes to editors

* *The share option price set at the start of each scheme is around 20 per cent less than the share price at that time, ensuring that savers make money right away.
* Tesco is the UK’s biggest private sector employer with more than 260,000 employees in the UK.
* Further case studies and some photos are available.

Contact Information

Deborah Watson

press office

Tesco

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