Shareholders back the Tesco board

"The fur is really going to fly in there", predicted one shareholder as he strode into Tesco's Annual General Meeting. In the end, it didn't. The board were given a hard time, sure. This was an AGM, directors almost always are.

Phillip Clarke, Tesco chief executive. Credit: Paul Faith/PA Archive/Press Association Images

But amid the complaints about the share price, falling sales and lower profits there were grumbles about the refrigeration system at Tesco's in Potters Bar, the lack of soap in the gents at Brent Cross, the unfriendliness of staff in Orpington.

The point is that every shareholder seemed to have their own agenda. At Barclays' recent AGM the anger was so focussed on pay it resonated, unsettling executives. The mood here was far less hostile, sullen rather than rebellious.

Tesco shareholders have every reason to feel glum. Credit: PA

Of course, Tesco shareholders have every reason to feel glum. For much of the last three years the supermarket has looked in steady decline. Philip Clarke, the chief executive, explained that Tesco is making the painful adjustment what he called a "new reality".

The recession, the internet, the likes of Aldi and Lidl (Clarke refers to them dismissively as "the discounters") has permanently changed the way we shop. Tesco’s problem is we are increasingly shopping elsewhere.

Happily, Philip Clarke has a turnaround plan: better trained staff, refurbished stores and "sharper" prices. Unhappily that plan is more than two years old and there's no sign it's working. Clarke's salvation is that it's no one has an obviously better idea. Slash prices? It's not clear that will achieve anything more than further reduce profits.

Philip Clarke has a turnaround plan. Credit: PA

Sir Terry Leahy said recently he's "very disappointed" with the way Tesco has performed since he handed over to Clarke at the end of 2011. Fair enough, but Sir Terry also knows that his time at Tesco is in the process of being reassessed.

Sir Terry Leahy said recently he's "very disappointed" with the way Tesco has performed Credit: PA

He did much right but his Fresh and Easy adventure in the United States was an expensive failure and the hypermarkets he constructed are deeply out of fashion. His halo has slipped and shareholders know it. "He was paid millions and lost billions", exclaimed one today. He got warm applause.

Philip Clarke has been widely characterised as a chief executive sitting in the departure lounge but today 98% of shareholders voted to re-elect him as a director. Clarke desperately needs something resembling progress to loom into view and quickly but the narrative has shifted subtlety in his favour.