PREVIEW-Tesco could face investor revolt over pay report
* Tesco annual meeting in London on Friday at 1000 GMT
* Pirc urges shareholders to vote against pay report
* Falling UK sales may prompt criticism of strategy
LONDON, June 24 (Reuters) - Tesco, the world's third-biggest retailer, could face a revolt over executive pay at its annual shareholders' meeting on Friday after an advisory group urged investors to oppose the supermarket group's remuneration report.
Bosses could also face shareholder pressure over the firm's 1 billion pound ($1.5 billion) turnaround plan for its core British business, having earlier this month reported a drop in quarterly underlying sales, resuming a trend seen for most of the past three years.
Once one of the most consistent British companies in terms of earnings growth, Tesco in April reported its first profit decline in over 20 years.
Pensions Investment Research Consultants (Pirc), which has estimated it advises funds with combined assets of more than 1.5 trillion pounds, has called on investors to vote against the store group's pay report in protest at what it regards as excessive payoffs to two departed executives.
Tesco paid Tim Mason, the former boss of its loss-making Fresh & Easy business in the United States which it is looking to exit, and Richard Brasher, ousted as the head of the UK business in March 2012, "liquidated damages" of 1.68 million pounds and 1.3 million pounds respectively in the 2012-13 year.
"These payments are calculated on the basis of base salary and the average annual bonus paid for the last two years, yet neither of these executives appear to have suffered a loss caused by the company," said Pirc, noting that Mason was also paid up to 100,000 pounds to repatriate back to Britain.
It also said Tesco's remuneration had the potential to be "wholly excessive" going forward.
A spokeswoman for Tesco said payments for Mason and Brasher were made in accordance with their contracts and reflected typical practice at the time they were signed.
"Our policy for new appointments is that termination payments in lieu of notice will be based on base salary and benefits only," she added.
Though Tesco's chief executive, Philip Clarke, has insisted his revival plan for the UK business is on track, he is likely to be bracing himself for a rough ride at the meeting after a particularly testing year.
In January the firm became embroiled in Europe's horsemeat food contamination scandal and had to withdraw products and apologise to customers. In April, along with the profit decline, it wrote down the value of its global operations by $3.5 billion and confirmed plans to exit the United States.
Tesco's sales are also falling in South Korea, China and in eastern Europe, prompting analysts to suggest further retrenchment could be possible.
($1 = 0.6498 British pounds)
(Reporting by James Davey; Editing by Mark Potter)