Sainsbury's duo get £1m in shares as staff Xmas bonus is cut

J Sainsbury's two executive directors were awarded shares worth almost £1m yesterday as the struggling supermarket chain told its staff they could forget about receiving a cash bonus this Christmas.

J Sainsbury's two executive directors were awarded shares worth almost £1m yesterday as the struggling supermarket chain told its staff they could forget about receiving a cash bonus this Christmas.

Just two days after the group unveiled an 8 per cent fall in annual profits, it revealed it had given its new chief executive, Justin King, up to 184,762 shares - worth £500,000 at yesterday's stock market price. Roger Matthews, the finance director, could receive up to 130,018, valued at £355,000.

The restricted shares were awarded in an attempt to incentivise the pair, who are the company's only executive board members, to turn around the troubled group. They will not be allowed to touch the shares for three years and even then will only get them if Sainsbury's total shareholder return manages to top that achieved by its rivals.

Nonetheless the news, which came a day after Mr King told the company's employees that he intended to axe their long-running Christmas cash bonus, is unlikely to go down well with Sainsbury's staff. It follows the group's decision to award Sir Peter Davis, who stepped up from chief executive to chairman last month, 80 per cent of a performance-related bonus, worth some £2.4m.

Instead of a £100 festive bonus, paid out every December for the past 25 years, the staff will get an extra 5 per cent off their shopping bills - provided they are happy to shop at Sainsbury's. The decision will affect 50,000 full-time staff and 100,000 part-time staff. Mr King intends to increase their store discount from 10 per cent to 15 per cent from October to December.

Joanne McGuinness, from the shopworkers' union Usdaw, said: "Our members will look at this as the directors operating a 'one rule for us, another rule for the workers' policy."

Sainsbury's intends to spend the money saved on bonuses on "improving our other incentive schemes (such as the increase to staff discount) over the coming months". It said the decision to axe the bonuses was made after successful trials last year.

The group also awarded Mr King options over 491,355 shares and gave Mr Matthews options over 345,768 shares. The 274.75p strike price for the options, exercisable between May 2007 and May 2014, was above yesterday's share price, which climbed 2p to 273p.