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Sainsbury's chief executive Justin King is in line for a near £5 million bonus this year as reward for his turnaround of the supermarket group.
The company today unveiled annual profits of £543 million — a rise of 11% that sets the group up for further growth.
It plans to open 50 convenience stores next year and a further 100 the year after that.
Sainsbury was expected to suffer in the recession, as middle-class shoppers deserted it for cheaper alternatives.
Instead, through marketing deals with Jamie Oliver and initiatives such as “Feed Your Family For a Fiver”, King was able to expand the group's customer base.
King defended his bonus payments as the result of several years' hard work, and pointed out that all staff will do well this year.
The 120,000 employees will share a bonus pot of £60 million — giving them an average of £500 each.
“I understand why people might think this is an odd time to be getting a bonus, but it has been earnt as part of a long-term incentive deal. It is conspicuously attached to success,” King told the Standard.
“I'm not a banker,” he added, referring to the economic strife caused by the financial sector.
Most of the bonus is in shares, but King is entitled to sell them for cash whenever he wishes.
There is persistent speculation that he will be poached to lead Marks & Spencer when Sir Stuart Rose steps down, but King, 47, insists that he is not looking to move on.
“Far from it,” he said today. “I'm going to be talking today about how much growth potential we have got.”
The profits — which come on the back of a 6% rise in sales, to £20.4 billion in the 12 months to the end of March — allow Sainsbury to ratchet up the dividend.
Shareholders will get 13.2p for each share they hold, a rise of 10%.
A quarter of that goes to the Qatari royal family, which has built up a 25% stake in the company.
The Qataris have toyed with a takeover bid in the past and could one day make a formal offer.
Richard Hunter at Hargreaves Lansdown stockbrokers said: “The results are decent and dependable enough, if a little unexciting. There is little to whet investors' appetite in these numbers, and the recent surge in the share price (up 22% over the last six months) leaves the shares as a weak hold.”
The stock slipped 3p to 337¼p.
Reader views (2)
Amoreno, Luxembourg
It's great that you had a nice response, but from Justin King? The note was probably from an assistant on King’s behalf. The cost of 2 giant panettones is cheaper than lawyer’s bills and court cases! Amoreno you might have got thousands in compensation if you had perused the case…
The 120,000 employees may get a bonus of £500 each… but how much are they on an hour? I think it would be better to increase the workers basic wage Mr King! But your not that nice are you?
- Paul, London
Justin King is a brilliant CEO-I had a complaint about a cake once and sent the package to him direct-The next day I received 2 giant panettones with an extremely nice note.This is the level of detail a successful CEO needs to master.Well done Sainsbury's.
- Amoreno, Luxembourg
