Ex-chairman loses £2.3m Sainsbury bonus

Sainsbury’s today said it had reversed its controversial decision to give former chairman Peter Davis shares worth about £2.3m (€3.4m).

The group’s pay committee said in a statement that it was unable to support its original recommendation to award 864,000 shares to Sir Peter for 2003/4.

The company is facing an investor revolt over the award, which was recommended in a year when annual profits fell by 2.9% to £675m (€1bn).

The committee said it had changed its mind after seeing the conclusions of a report on the firm by new chief executive Justin King, who is undertaking a wholesale review of the business.

Sainsbury’s said it would still be putting the original remuneration report, which includes the proposed award to Davis, for approval to next Monday’s annual meeting.

It said lawyers had advised it against its earlier proposal to put an amended resolution before the meeting which excluded the details of the award.

But it said it would not be implementing the recommendations as far as Davis was concerned.

Davis quit as chairman last week following pressure on the company from institutional shareholders unhappy about its recent performance.

Sainsbury’s has been losing ground during the last 12 months to rivals Asda and Tesco due to stiff price competition.

The group said at the time that discussions with Davis about possible amendments to the share award had failed, and the matter was now in the hands of both parties’ lawyers.

Pension and investment lobby groups are planning to vote against the remuneration report at the annual meeting.

A spokesman for one of the groups, the National Association of Pension Funds, said: “We are against this because Sir Peter Davis was getting a huge number of shares despite the company’s relatively poor performance last year.

“We don’t have any problem with people getting higher awards provided their performance justifies it.”