Bonus scrapped for Sainsbury's staff as boss gets share options

Sainsbury’s staff today discovered their Christmas bonus was being scrapped - just as new boss Justin King was handed potentially lucrative share options.

The supermarket chain confirmed it won’t be offering staff a £100 (€148) goodwill payment in December for the first time in 25 years as it focuses investment on a trading revival.

The decision will affect 100,000 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, the option of almost 500,000 shares, exercisable at 274.75p from 2007.

He will also be in line for a further 184,700 shares worth more than £500,000 (€744,000) if he meets performance targets over the next three years.

And it comes after chairman Sir Peter Davis was awarded £2.4m (€3.5m) 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 £15.3 billion in the year to March 27, the group revealed on Wednesday.

In addition to withdrawing its £100 (€148) 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.