Sainsbury's pins turnaround hopes on £90m incentive plan
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.J Sainsbury is pinning its recovery hopes on a new incentive scheme that could pay out more than £90m to its top 1,100 managers if they transform the group's fortunes over the next four years.
J Sainsbury is pinning its recovery hopes on a new incentive scheme that could pay out more than £90m to its top 1,100 managers if they transform the group's fortunes over the next four years.
The supermarket group is offering its 900 store managers the chance to scoop a £50,000-plus windfall if it succeeds in doubling its earnings per share and growing its annual sales by £2.5bn, excluding petrol and financial services. Philip Hampton, the chairman, has spent the past six weeks consulting the group's institutional investors about the new scheme, spelling out the final details in a letter to a handful of shareholders this week.
One of the company's biggest shareholders said yesterday it was "broadly supportive" of the plan, which follows last summer's dispute over the £2.6m bonus Sainsbury's paid out to its former boss, Sir Peter Davis.
The latest scheme will pay out a maximum of five times annual salary for the group's top board directors, giving Justin King, the chief executive, the change to pocket a bonus of more than £5m on top of his basic salary.
The four-year plan will vest 12 months early if the group's executives hit their targets early. The company's plc and operating board directors must invest up to half of their gross salary in shares by July 2006 to be eligible for the full payout.
Based on yesterday's share price of 288.25p, a store manager could receive £57,650 if the company achieves its goals. The bosses of its convenience stores, including the Bells and Jacksons groups that it recently purchased, are excluded from the scheme.
Mr Hampton told shareholders that to grow Sainsbury's sales by £2.5bn to about £20bn, the group must grow annual underlying sales by around 3 to 4 per cent in line with the UK food retail market - a feat the company has managed only once during the past 10 years.
The company, which hopes to introduce the scheme as soon as possible, scrapped its current incentive arrangements after concluding that recent option grants are "unlikely to vest". It hopes the new scheme will create an "ownership culture" for the new senior management, akin to that enjoyed by directors of private equity groups.
Sainsbury's is following in the footsteps of the retailers WH Smith and Next, which recently introduced similar plans allowing their top bosses to co-invest a slug of their gross salaries in the hope of multimillion-pound payouts.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments