Sainsbury's facing investor rebellion

UK supermarket chain Sainsbury’s is facing an investor rebellion over a pay settlement for ousted chairman Peter Davis, it was reported today.

Davis is in line to receive a severance deal worth at least £3.2m (€4.75m) - despite the retailer last week warning that annual profits would be well below market hopes.

Lawyers are thrashing out details of the pay-off ahead of the annual meeting of the company on July 12.

Sainsbury’s is expected to face tough questioning from investors over its decision to make a £2.4m (€3.56m) share award to Davis for his work last year.

The performance-related bonus was rubber-stamped by its remuneration committee even though profits fell 2.9%.

Davis was also entitled to one-and-three-quarter times his annual salary if his contract was terminated early.

Media reports said shareholders are planning to urge new chairman Philip Hampton to make sweeping changes to the board of the struggling supermarket chain.

Shareholder lobby group Pensions Investment Research Consultants (PIRC) dubbed the payout a “reward for failure” and has urged its members to oppose the remuneration report.

It is understood that the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) have also raised serious concerns.