Corporate Governance at Tesco

Tesco, the UK's largest retailer, had been built on the "pile it high and sell it cheap", philosophy. Tesco's operations included convenience and gasoline retailing (Tesco Express), small urban stores (Tesco Metro), hypermarkets (Tesco Extra), and financial services.

Tesco, had a profitable online business, and was also one of the more globalized companies in the retailing industry. Since 1993, the company had grown significantly outside the UK, operating more than 300 stores (including hypermarkets) in other countries. Tesco's acquisition of C Two-Network, a small Japanese convenience store operator, marked its entry into the world's second-largest consumer market.

Tesco was also challenging rivals J Sainsbury and Wal-Mart-owned ASDA on the fashion front with an exclusive agreement with US clothing brand Cherokee to supply fashions to its stores.

To strengthen its presence in the convenience store market, Tesco had bought T&S Stores and had plans to bring them under the Tesco Express banner. In 2002, Tesco generated sales of $96.8 million and reported a net loss of $0.7 million. Tesco had committed itself to high standards of corporate governance by applying the principles set out in the Combined Code. In late 2003, the company introduced changes in its board structure to facilitate the long-term development of board practices...