Ousted Tesco (LON:TSCO) boss Phil Clarke will receive over a million pounds from his former employer - money which had been held back by the UK grocer after a major accounting scandal last year.
The troubled supermarket said at its half-year results back in October 2014 it intended to withhold the monies as it reeled from the discovery of a £263mln shortfall in profits.
But today, Tesco’s legal team admitted it had no grounds to withhold the payments and added that former finance director Laurie McIlwee, who resigned, will receive £971,000.
Both executives left prior to discovery of the black hole in the firm’s profits, but had been leading the business during the time in which the accounting errors had occurred.
"The company is contractually committed to make the relevant payment to each former director unless it can legally establish a case of gross misconduct against him," Tesco said in a statement.
The retailer went on to emphasise that the Serious Fraud Office is in the middle of an investigation in relation to the accounting scandal.
It said that "if new information were to come to light which would change this assessment, the company will pursue recovery of the payments and damages."
Tesco issued a string of profit warnings under Clarke and its share price tumbled to a 14-year-low. He was ousted in October and replaced by Dave Lewis, a former Unilever boss.
Lewis is now working to balance the books and put the scandal behind the business.
Last week, he revealed the location of 43 Tesco stores in the UK which will shut, a move that will see 2,000 staff lose their jobs.
Lewis said the cuts, which also include the closure of the grocer’s Cheshunt headquarters and consolidating it into the Welwyn Garden City office, will deliver savings of £250mln per year at a one-off cost of £300mln.