The chief executive of Sainsbury’s missed out on annual and long-term bonuses last year after the business was hit by fierce competition, price deflation and a groceries price war.
Mike Coupe, who took over from Justin King in July last year, received salary, benefits and pension contributions of £1.05m, as well as £458,000 in deferred shares. He received no cash bonus for the year to March 2015, nor did he qualify for a three-year performance payout.
“This has been a challenging year for the grocery retail sector,” Mary Harris, chair of the remuneration committee said in the supermarket group’s annual report. “The heightened competitive environment, food price deflation and price investments have impacted our financial performance as well as the sector overall.”
Meanwhile, King has received more than £8.5m in cash and shares in the last two years – most of it being the release of long-term share bonuses linked to awards dating back as far as 2008. Included in this sum, he recieved deferred shares and long-term share awards totalling £2.1m last year, and £5m in the previous year.
Despite stepping down in July 2014, King remains in line for further share-based payouts for future years having reached a special accommodation with the remuneration committee under which Sainsbury’s said he had waived a contractual right to £1.7m in severance pay.
Writing in the annual report, Harris told shareholders that in the light of a disappointing performance the 2012 round of long-term bonuses – which would otherwise have been paid out last month – would not be released, meaning both Coupe and King miss out.
King is not the only departed chief executive to receive considerable performance payouts after leaving the company. Terry Leahy, the former chief executive of Tesco, has also received millions in share-based long-term bonuses since his departure.
Some companies deploy an alternative policy of closing out long-term bonuses on the departure of executives. Where this is the case, payouts are typically calculated with reference to how far through the incentive period the executive has worked.
