A King's ransom as Sainsbury's boss pockets £5m

Published on Wednesday 10 June 2009 21:37

SAINSBURY'S chief executive Justin King made £5 million in pay and share bonuses last year for helping to turn around Britain's third biggest supermarket group.

Alongside 2.05m in pay, pension and bonuses, King achieved all the targets set for him when he launched the recovery programme in 2005. This meant he qualified for 900,000 shares with a value of just under 3m, according to the company's annual report out yesterday.

His rewards will continue this year, as a further 831,000 shares vest under the same plan and 195,000 shares under a separate incentive scheme – worth a further 3.3m in total at the chain's current share price. Last month, Sainsbury's posted a better-than-expected 11 per cent rise in annual profits to 543m.

That performance triggered a bonus pot of 60m to be shared by Sainsbury's 120,000 staff, compared with a 47m pay-out in the previous year.

To qualify for his package, King has had to grow sales by 2.5 billion and earnings per share by 21 per cent over the four-year period – and both targets were met.

The chief executive also stands to benefit from further share awards in coming years, the annual report said.

He was last year granted a potential maximum of 630,876 shares worth 2.1m under its 2006 long-term incentive share scheme. These shares are set to vest in 2011, depending on performance.

Meanwhile, under a third incentive programme, the deferred annual bonus scheme, King invested 50 per cent of his bonus in 158,042 shares.

This will be matched by a further 316,000 shares by the company in 2011 – worth a further 1m – if Sainsbury's exceeds the performance of other retailers, including Tesco, Morrisons, Marks & Spencer and Next.

The supermarket group's shares closed up 3.25p yesterday, at 327.5p.