The
former chairman of Sainsbury’s is set to keep his controversial £4m pay-off in
spite of the supermarket giant’s attempts to reduce the severance package.
The
company is believed to have been advised by its lawyers that if it challenged
Peter Davis’ pay-off in the courts, it would almost certainly lose, reports the
Independent.
Davis
was forced out of the company two months ago after a profits warning. During
his four years at the head of the group, where he began as chief executive
before moving into the chairman’s role this year, Sainsbury’s lost market
share, slipping from the second to the third-largest UK
supermarket chain.
Following
his departure, the incumbent chief executive, Justin King, sought to reduce Davis’
severance package, which constituted 864,000 shares, worth £2.4m, one year’s
salary of £500,000, and another share and options package worth up to £1.5m.
However,
Davis’
contract, drawn up in 2003, guaranteed him a payout of up to 1 million shares
should Sainsbury’s achieve as little as 70 per cent of its targets. Even after
the group’s disappointing performance, the terms of the remuneration scheme
still awarded Davis
86 per cent of the maximum share package.
An
independent mediator has now been appointed to resolve the dispute.
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