Sainsbury's has confirmed that it is cancelling the controversial bonus awarded to ousted boss Sir Peter Davis.
The shares, which had been set aside for Sir Peter were due to be handed over next July. But the Sainsbury’s board, led by senior independent director Lord Levene has decided he deserves nothing.
Sir Peter, who was forced out by shareholders, was in line for 864,000 free shares in the grocery business worth around £2.3 million.
It is understood the supermarket chain also wants to trim a potential £1.5m golden goodbye to its former chairman, who was previously chief executive. His contract entitles him 1.75 times his £850,000 salary.
The company said the decision to claw back every penny of the bonus was made when the board realised the true scale of Sainsbury’s problems.
It said it had used “the information available at the time” to award the free shares to Sir Peter. Shareholders criticised the award as the chain had unveiled an eight per cent decline in profits and a decline in sales despite Sir Peter’s £3 billion investment programme.
The supermarket has said it had taken advice from remuneration consultants Towers Perrin, and “believed at the time that this award was in the best interests of the company and its shareholders”.
The company is now likely to face a legal battle with its former chairman over the non-payment of the bonus and the scale of any golden goodbye. The chain said: “These matters have been referred to the respective legal representatives of both parties as part of his termination arrangements.”
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