Tesco defends chief's share sale ahead of profit warning
Tesco has defended a senior executive who sold more than £200,000 worth of shares ahead of a profits warning that took £5bn off the company's value.
The supermarket giant said it was confident that its UK chief operating officer had not possessed any price-sensitive information at the time the sale was approved.
It added that Noel "Bob" Robbins sold less than 5% of his shareholding.
Tesco reported its worst Christmas sales results in decades on Thursday.
Mr Robbins sold 50,000 shares at 404.5p on 4 January, a week before the company revealed its UK Christmas sales results, which triggered a 16% drop in its share price.
The sale, which was approved by chief executive Philip Clarke, took place three days ahead of a "close period" preventing executives from selling shares before a key trading update, say reports.
Tesco has done nothing illegal but the perception may override the reality. Bob Robbins was fully entitled to sell 5% of his one million Tesco shares three days before the company went into what is referred to as its "close period".
Then the top bosses at the retailer decided to beef up a planned trading update into a full profits warning and spooked the markets last Thursday.
Embarrassingly for Mr Robbins - the man who controls every Tesco store in the UK - those top bosses didn't include him as he was not privy to the information which would surely have prevented him selling £200,000 worth of shares.
Under FSA rules, no shares can be bought or sold by senior executives 30 days before any significant company announcement.
The question for the City watchdog is whether Tesco should have informed the regulator that it was about to upgrade a Christmas trading update into a major market moving statement and thereby ban any of its bosses from trading in the company's stock.
In a statement, a Tesco spokesman said: "Bob Robbins sold less than 5% of his substantial shareholding in Tesco for necessary family expenditure.
"The sale, which was not made within a close period, was approved in the usual way.
"We are confident that Bob was not in possession of any price-sensitive information at the time that the sale was approved."
Tesco did not complete its Christmas trading period until after the sale was made, the statement said.
"In fact, the significant movement in the share price on Thursday was, we believe, primarily due to the announcement on profit guidance and UK investment plans for 2012/13.
"Bob was not party to discussions around the profit guidance or the investment plans at the time he made his sale."
The company said that as a member of senior management, Mr Robbins is required to hold shares with a value equivalent to at least his basic salary.
Following this sale, he will continue to hold substantially more than this minimum requirement, it added.