Sainsbury's staff lose bonus, boss gets free shares

Sainsbury’s today handed new boss Justin King free shares worth £1.4m (€2.1m) - just as staff discovered their Christmas bonus was being scrapped.

The British supermarket chain confirmed it won’t be offering staff a £100 (€148.70) goodwill payment in December for the first time in 25 years as it focuses investment on a trading revival.

The decision will affect 50,000 full-time staff who have instead been offered a 5% increase in their store discount to 15% from October to December.

Details emerged as Sainsbury’s said it was giving Mr King, who joined the company as chief executive from Marks & Spencer two months ago, nearly 500,000 free shares exercisible from 2007.

He will also be in line for a further 184,700 shares worth more than £500,000 (€743,500) if he meets performance targets over the next three years.

And it comes after chairman Sir Peter Davis was awarded £2.4m (€3.6m) in shares for his work during a year in which profits fell 2.9%.

Sainsbury’s said the decision to replace the Christmas bonus with an increased store discount was made after successful trials last year.

“The balance will be spent on improving our other incentive schemes over the coming months,” the company stated.

Sainsbury’s has lost ground over the past 12 months to rivals such as Asda and Tesco in the face of stiff price competition, while it has also been hit by the impact of its own restructuring drive.

Annual profits fell to £675m (€1bn) and like-for-like sales were also on the slide, down 0.2% to £15.3bn (€22.8bn) in the year to March 27, the group revealed on Wednesday.

In addition to withdrawing its £100 (€148.70) bonus, Sainsbury’s will not make an award through its “commitment” share plan which is linked to profits.

Staff at its head office in London have also been informed that no earnings-related bonus will be paid this year.