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Simon Roberts has only just got his feet under the desk at Sainsbury’s, but shareholders are already asking whether the supermarket’s new chief executive can follow the retailer’s own advertising slogan and “live well for less”.
Roberts will get his first outing before shareholders at the company’s quarterly results on Wednesday before the annual shareholder meeting on Thursday, where questions are expected to be asked about both his potential bonuses and finance director Kevin O’Byrne’s pension.
Pirc, the shareholder advisory group, is urging investors to oppose Sainsbury’s remuneration report. Admittedly, most of its ire is directed at the payout to Roberts’s predecessor Mike Coupe, who stepped down last month. However, Pirc says that potential bonuses for the year ahead could add up to 470% of salary, which it believes is excessive. It also raises concern about the basis on which long-term bonuses are earned.
The Observer has also learned that the influential Investment Association’s Institutional Voting Information Service (Ivis) has slapped Sainsbury’s report with a “red top” alert – its strongest possible objection – over pay arrangements for O’Byrne.
The Investment Association, which represents City fund manager with a combined £7.7tn worth of assets, warned companies last year to publish credible plans to cut retirement packages down to size by 2022.
But Sainsbury’s is set to blow through the IA’s deadline. O’Byrne, who has been pocketing pension payments worth about 25% of his salary, will gradually see his pension pay reduced over the next four years until it is worth 7.5% in March 2024. It is that long goodbye to the annual cash handout that the IA objects to.
The row, which follows similar recent battles at Morrisons and Tesco, comes as Sainsbury’s is expected to unveil healthy trading figures. In an ideal world Roberts might not have chosen to present his first set of results during a pandemic. But the UK’s attempt to limit the virus with a lockdown on restaurants, cafes and a shift to working from home has been a huge boost for supermarkets.
Sainsbury’s is growing faster than German discounter Aldi for the first time in about a decade. Analysts expect Sainsbury’s grocery sales in the three months to the end of June to be up by 12%. A long spell of unusually warm and sunny weather, and the enforced closure of many of its high street rivals, is also likely to have helped Sainsbury’s Argos chain to a better than expected start to the year. Unlike many rivals, the catalogue shop was able to keep dozens of its sites open within Sainsbury’s stores.
Roberts, who has worked for Sainsbury’s for about four years and shared in many of Coupe’s decisions, is unlikely to be unveiling any major strategic changes. His challenge will be to convince investors that the retailer has an exciting story beyond this short-term growth spurt.
The shares have yet to recover from the collapse of Coupe’s attempted merger with Asda just over a year ago and the group will be wary of other major takeovers in the near future.
Investors will want to know how Sainsbury’s plans to cater to the shift online and to more local shopping without blowing the budget.
The impending recession in the UK is also likely to mean a new wave of tough price battles with the discount chains. Tesco kicked things off by more than doubling its Aldi price-match promotion last week. The ball is now in Sainsbury’s court.
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