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Tesco Uses Smoke And Mirrors
To Hide Search For Fresh & Easy CEO

Jim Prevor’s Perishable Pundit, May 15, 2008

Our piece, Tesco Searches For American CEO Of Fresh & Easy, broke some important news:

Now, however, we have learned that Tesco is actively recruiting for a new American CEO for its Fresh & Easy division. It is expected that Tim Mason and several other key executives will be returning to Britain.

We went on to speculate what was motivating this and pointed out that candidates were being told that Tim Mason, the esteemed British executive Tesco sent over to serve as CEO of Fresh & Easy, was needed back in Britain to address the core business.

We also speculated on some possible alternative explanations.

In any case, Tesco never objected to the story. However, when others inquired about the issue, Tesco denied it.

The Fresh Produce Journal in the United Kingdom, for example, was told, “Tim Mason and his team are not coming back from the US,” a spokeswoman said. “There is absolutely no truth in the rumours at all.”

We were also contacted by most of the London papers and several British investment banks who also told us that Tesco had, often vehemently, denied the veracity of our story.

Yet this was perplexing to us. Before we ran the story, we had spoken to three separate individuals who all had actually interviewed for the job. All had the same basic story.

Traditionally, a public company can decline comment, but it can’t mislead its investors by making false statements to the media.

So we were uncertain what to make of all these denials.

Especially because after we published the story, we kept hearing from more and more people who had either been interviewed or contacted by a head hunter regarding the Fresh & Easy CEO job.

What can it mean?

Well, one possibility is that Tesco is backtracking. Perhaps they couldn’t find an acceptable candidate and so are not going to go ahead with the plan. It is also possible that nobody had told Tim Mason prior to our publication of the story and Tesco backtracked fast in light of his opposition.

Tim Mason may have really wanted to keep his job. We understand he bought a bungalow in Santa Monica and enjoys boating. Besides the pay is decent. They just published Tesco pay figures and between base, bonuses, share awards, his kids’ school fees, etc., he was paid almost $14 million US plus got help paying some taxes:

The second highest Tesco earner was Tim Mason, the former marketing director who moved to California to build the group’s new Fresh & Easy chain of convenience stores.

Mason, who now lives in Los Angeles, received £4.5m in basic pay and annual bonus payments and benefited from £2.3m of share awards granted in previous years. His basic pay is £938,000 and he received £260,000 “in respect of certain localisation costs, including accommodation and school fees”. He has also been given a payment to cover “additional tax due on equity awards made prior to Mr Mason’s move to the US”.

It may be that the whole search is a ruse. Jeff Adams, an American who had been CEO of Tesco’s Lotus division and was given the Number Two job at Fresh & Easy, would be the logical candidate to step in as CEO of Fresh & Easy. Perhaps the interviews were to prove they were considering women, minorities, veterans, etc.

None of these explanations would really explain the denials. The only thing we can speculate is that they are answering a different question than what they had been asked. Note the quote Tesco gave to the Fresh Produce Journal in London:

“Tim Mason and his team are not coming back from the US,” a spokeswoman said. “There is absolutely no truth in the rumours at all.”

Note that they did not say, “Tesco and its retained recruiters are not now interviewing and have never interviewed any person other than Tim Mason to be the CEO of Fresh & Easy.”

We always said that the cover story — that Tim Mason was needed back in the UK — would have to be changed. The stock would crash if word got out that Tesco’s management team was so thin that it “needed” Tim Mason to address core issues in the UK.

Perhaps Tesco is trying to play the semantics. There is simply no question that people have been interviewed for the job of CEO of Fresh & Easy.

Perhaps, despite cover stories, the plan is for Tim Mason to stay in the US. Perhaps he will stay with a corporate title, say President for the Americas, and he will move on to do acquisitions. Perhaps he will buy Meijer as we suggested or, perhaps, since Tesco has had some real success in developing countries, what if he made an acquisition in Latin America?

Some of the spokespeople for Tesco — who doubtless are telling the truth as it has been told to them — have been a bit too quick to discredit what we wrote.

We know exactly what we wrote and the fact is that food industry executives have been interviewed to be CEO of Fresh & Easy. That is the fact. Everything else is just smoke and mirrors.

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