The board of UK supermarket group J Sainsbury has said it lo longer supports a controversial share bonus awarded to former chairman Sir Peter Davis.
The company said it has reconsidered its remuneration report insofar as it relates to Davis in the light of recent developments including institutional shareholder objections to his remuneration package, the company’s recent trading update and Davis stepping down as chairman. Davis left the company last week amid a row with shareholders over his proposed bonus for 2003/04.
The company’s remuneration committee had proposed an award of 864,000 shares for 2003/04 for Davis out of a possible total award of 1 million shares. However, on 30 June 2004, new chief executive Justin King reported to the board on his early analysis of the condition of the company.
“Based on this new information, the remuneration committee can no longer support its original recommendation on the proposed share award,” Sainsbury’s said.
The company said it has sought legal advice regarding the remuneration report resolution, which must be put to shareholders at the Annual General Meeting on 12 July. The board considered putting an amended resolution to the meeting, which would have excluded matters relating to Davis, but this was rejected on advice from the company’s lawyers and due to a mixed response from various shareholder groups.
Sainsbury’s said it recognises that some shareholders may vote against the resolution at the AGM, but that the report also covers many other matters important to the company and it will therefore continue to recommend the remuneration report to shareholders at the AGM. However, the board said it will not implement these recommendations in relation to Davis. The company added that such matters have been referred to the respective legal representatives of both parties as part of Davis’ termination arrangements.
