Troubled supermarket giant Sainsbury’s has performed an abrupt u-turn by withholding a £2.4 million ‘performance-related’ bonus from ex-chairman Sir Peter Davis.
The company’s remuneration committee said that after "new information” it could "no longer support its original recommendation on the proposed share award".
It is believed that Sainsbury’s new chief executive, Justin King, told the board that the company’s performance and financial state was much worse than previously thought and argued that the entire bonus should be withheld.
The award of 864,000 shares to Sir Peter in May - representing 86 per cent of the maximum payout under his ‘performance-related’ incentive scheme – provoked a revolt amongst institutional investors which led to him being forced out of his job of July 1.
But despite the climb-down, investors are still likely to make their unhappiness known at the company’s annual general meeting next week by voting against the company’s remuneration report.
A spokesman for 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.”
The issue of how much – if any – of the bonus will now to paid to Sir Peter is now in the hands of lawyers.
