Sainsbury’s Simon Roberts is an effective CEO – but a £5m pay package is indefensible

A reward for delivering profiteering profits,” is how Unite’s general secretary Sharon Graham described Sainsbury’s chief executive Simon Roberts’s bumper £5m package, revealed in its annual report.

His pay represented a 33 per cent rise on the £3.6m he received the previous year. Spin doctors don’t get a lot of sympathy but you have to feel for whoever was tasked with justifying this in the midst of a generational cost of living crisis. It’s the definition of “impossible job”. Easier for the King’s Arms Sunday league first 11 to get a result against Manchester City in a Champions League warm-up than to secure a favourable response to that number. But let’s don the boots and have a go...

Graham delivered a fine soundbite but is her description fair? Probably not. The supermarkets have found themselves under pressure lately and no wonder with food prices the way they are. But, as this column has previously discussed, the sector’s margins are slim and considerably lower than they were before Aldi and Lidl reached critical mass. The grocery market is very competitive.

For an explanation of Britain’s high food price inflation we should really look less to Holborn (where Sainsbury’s HQ is located) and more at Westminster. Start with the Tories’ ultra-hard Brexit and the extra costs it has imposed, the difficulties farmers face in getting people to pick their produce which has led to perfectly good food rotting in the fields, the other ways domestic production has been stymied by bad policy or just the lack of it.

Roberts, meanwhile, has proven to be an effective CEO of Sainsbury’s, which has picked its executives well in recent years. This is something that big companies often struggle to do, despite all their search firms and the decades of business experience they populate their boards with. You’ll see what I mean if you mention the name “Philip Clarke” in the hearing of a senior bod at Tesco.

Yes, Sainsbury’s would say, exactly. “That’s what we’ve been trying to tell you. He’s our Harry Kane!”

One of the stock justifications for pay packages like this is indeed the need to retain talent, but the number of CEOs who ultimately transfer is really very small. Those justifying hyper pay often like to compare corporate executives to footballers but that really doesn’t wash because in doing that you’re effectively comparing apples with washing powder.

We could say that there is a technical reason why the package is as high as it is this year, connected to the maturation of part of Roberts’s long-term incentive plan, but... this is getting painful, isn’t it?

It might have been easier to stomach had Sainsbury’s acceded to the demands of some of its shareholders – including blue-chip money managers such as Legal & General Investment Management – and become the first supermarket to secure accreditation by the Living Wage Campaign.

But it didn’t, citing the need for “flexibility” in setting wages. But if you need to be flexible when it comes to setting wages for those on the ground floor, shouldn’t the same be applied at the top? What’s good for the goose etc.

The remuneration committee must surely have foreseen that chucking £5m at the CEO at a time when people are going without meals looks terrible to your customers, even if that CEO is as good at his job as Roberts.

Couldn’t that “flexibility” have been utilised to address the issue? The fees paid to non-executive directors aren’t ungenerous; they’re smart people and they spend a stack of cash on consultants to help them with this sort of thing.

Packages such as this really do risk bringing business into disrepute, especially in the midst of the current economic turmoil. It will inevitably hand ammo to the supermarket’s enemies. Unlike Graham, who is clearly voicing what her members are feeling, their motivations are often less than pure. Roberts’s pay may yet provide a means of diverting attention away from some very real (policy) failures.