Nearly one in five Tesco shareholders yesterday refused to back a bonus scheme that could see Sir Terry Leahy, the chief executive, pocket an £11.5 million windfall on top of his salary.

Results revealed at the supermarket’s annual meeting showed just over 83 per cent of shareholders voted to back the controversial remuneration package, which will award the chief executive bonus shares depending on the success of Tesco’s Fresh & Easy convenience chain in the United States. However, almost 17 per cent either abstained or voted against in a significant snub to Britain’s biggest grocer.

The protest vote follows opposition to the plan from both the Association of British Insurers and Pirc, the corporate governance body.

Pirc this week attacked the proposed pay package as “excessive”, stating that any award should relate to the performance of the group as a whole.

The ABI issued a rare “amber-top” warning on the supermarket group’s pay plans, high-lighting potential corporate governance problems.

It said: “After detailed discussions with the company led to substantial modifications in the proposals, we have issued an amber-top, indicating there are issues for shareholders to make a judgment on.”

Sir Terry, who received £4.62 million in cash and shares last year, would pocket up to 2.5 million shares under the New Business Incentive Plan if Tesco cracks the American market. The shares would gradually vest between 2011 and 2014. The scheme would only apply to the chief executive. He is already eligible for an existing potential share bonus of 100 per cent of salary and cash bonus of 100 per cent of salary.

A successful launch in the US is seen as one of the biggest tests of Sir Terry’s tenure in charge of Tesco.

The group has 100 sites in the pipeline, including 30 in Phoenix and 14 in Las Vegas in a £250 million-a-year project. It wants to open 50 Fresh & Easy stores by the end of next February and expects the venture to break even by the end of the second full year.

The pay plan drew criticism from Ben Birnberg, the secretary of War on Want, which failed in a separate resolution calling for Tesco’s suppliers to undergo independent auditing to ensure decent pay and conditions for workers in the developing world.

While only 8.6 per cent of shareholders backed Mr Birnberg’s resolution, 20 per cent refused to reject it. He received support for his resolution from the Joseph Rowntree Trust, with just under a million shares, while the CIS, a significant shareholder in Tesco, was among those that abstained.

The board of Tesco insisted the company was already taking steps to ensure its suppliers treat workers properly.

After criticism from Gertruida Baartman, a South African fruit picker whose farm supplies Tesco, David Reid, the chairman, promised the company would be expanding an ethical audit of South African farms.

Mr Reid added that those institutions refusing to back the bonus scheme for Sir Terry were not against Tesco, but were worried about setting a precedent. “If other companies started to use that, it would be something they would not like,” he said.

The annual meeting came just days after Tesco cautioned that it faced tougher trading in the coming year alongside first-quarter results that disappointed the City.

There was little criticism from many of the 500 private shareholders who turned up to the QEII Conference Centre in London. One complained about the print size on the back of Tesco vouchers, while another asked why his local supermarket always runs out of his favourite coffee late in the afternoon.

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