9th Jun 11
Sainbury’s boss sees pay cut
by Katie Naylor
Out of pocket? Sainsbury's boss takes home a mere £3.2 million
Out of pocket? Sainsbury's boss takes home a mere £3.2 million
Sainsbury’s boss Justin King earned substantially less pay in 2010 after the supermarket group failed to hit sales growth and other performance related targets.
Although King took home £3.2m, his pay was significantly lower than a year earlier when he pocketed almost £8m for the financial year in 2009, helped by cashing in on share options worth £4.5m. Sainsbury’s said its senior managers earned less than 50 per cent of their full bonus entitlements during a challenging yet successful year where weak consumer spending resulted in the big grocery companies fighting for sales.
Although the group’s profits rose nine per cent to £665m over the year to 19 March, its remuneration committee’s chairman, Bob Stack, said it had not been enough to hit stretching targets, which, in addition to profit and sales goals, include other measures like product availability.
Including benefits and bonuses, King’s earnings were worth £2.6m, compared to £3.3m the previous year. He topped it up by £588,000 after exercising share options. During May’s annual results, the third-largest supermarket in Britain said employees were sharing a bonus pool of £60m – 25 per cent lower than the record £80m which was paid out for the financial year in 2009.
But after reviewing two of the incentive schemes, Stack said that the committee had opted to make alterations which would enable top executives to earn higher bonuses this year, raising the maximum payouts from 80 per cent to 90 per cent of total salary. The changes will not affect King, who already can earn a bonus of 125 per cent from them.
Changes to a separate scheme saw a drop in the amount of top 200 leaders who are eligible for free shares. Stack said that the plan is focused on senior management who are the best placed to drive the group’s long-term performance.
The company’s annual report also revealed that below inflation salary rises had been handed out to its executive directors. The salary of King increased from £900,000 to £920,000, while Finance Director John Rogers’ pay will increase from the £425,000 that was agreed last summer when he joined the group to £500,000. The company said the rise reflected his enlarged position, which now also includes the property division since the resignation last month of Darren Shapland, the group development director.
Market leader Tesco last week said that it was to simplify its executive pay scheme and reduce Chief Executive Philip Clarke’s base salary to £1.1m in an attempt to end disagreements with shareholders concerning boardroom pay.
King was brought into Sainsbury’s in 2004 in order to front the turnaround of the grocery chain, which was losing market share to competitors and declining in profitability. King, along with campaigns led by celebrity chef Jamie Oliver, has helped it regain ground, with the latest set of Kantar Worldpanel data placing its share at 16.3 per cent. Asda is in second place with 17.2 per cent, behind Tesco with 30.7 per cent.
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