Sainsbury's King in line for £5 million bonus

Sainsbury's is understood to be setting up a£90 million incentive scheme that could see chief executive Justin King pocket£5 million, according to press reports. The incentive, payable to 1,100 Sainsbury's managers, will be handed over if the retailer's fortunes are transformed in the next four years.

The retailer needs to double its earnings per share and increase its annual sales by£2.5 billion, excluding petrol and financial services, for the payout to materialise. The scheme, which still has to get shareholder approval to come into effect, will pay out a maximum of five times the annual salary for the retailer's top board members.

Investec analysts said it was quite possible for the retailer to fulfil the criteria set out for the participating managers to get their bonus. The broker said: 'We think Sainsbury's will be able to achieve these targets, especially because the earnings target does not assume much margin upside. Once the company resolves its availability issues we would expect strong operational gearing to come through with possible upgrades this time next year.'