The Panam needed to backtrack the runway to exit on to a taxiway closer to the threshold.
ATC in Tenerife-North was infamous in those days, a Dan-Air B727 in to the side of a mountain etc, and the Panam crew had difficulty understanding ATC instructions and this probably slowed down their progress wheras they had not exited the runway as the KLM started it's roll.
Apparently crew fatigue played it's part upon the KLM crew which was apparently commanded by one of KLM's more senior management Captains.