Sainsbury's facing defeat over choice of Prosser as chairman

J Sainsbury, the supermarket chain, faces a humiliating climbdown over the choice of Sir Ian Prosser as chairman-elect this week if meetings with shareholders reveal entrenched hostility to the appointment.

The company is pressing ahead with meetings with large investors that will include Sir Ian, to explain its position but also to listen to objections.

The company has conceded that Sir Ian may be asked to stand down after being announced as the group's deputy chairman only last Tuesday. The plan was for Sir Ian to step up to chairman once Sir Peter Davis retires in the summer of 2005. However, large shareholders have voiced their concern over the appointment. They cite Sir Ian's track record at Six Continents, the leisure group formerly known as Bass, which eventually demerged last year to form InterContinental Hotels and Mitchells & Butler, the pub group. They argue Sir Ian's time there as chairman and chief executive was marked by poor shareholder returns and intransigence in meeting shareholders' demands.

On Saturday, in Sir Ian's first interview since being appointed, he told The Independent: "Remember, the person who runs a business is the chief executive, that's the person who will start the whole process of the strategy. Then you have a board who will agree the strategy, or in Sainsbury's case already has agreed it, and they will monitor the strategy and offer advice. If you have two retail specialists as chairman and chief executive then one might well start to second guess the other."

A spokeswoman for Sainsbury's said the company would listen to shareholders' views. "We talked to shareholders last week and we are talking to them again this week and we will listen to what they have to say," she said.

However, the company could be swayed into finding an alternative if those views are universally hostile.

Finding a successor was one of several conditions that triggers a bonus of more than £800,000 for Sir Peter. But the City's widespread indignation at Sir Ian's appointment is deeply embarrassing for both Sir Peter and the company's nominations committee.

The company also hired Anna Mann of headhunter Whitehead Mann, one of the most respected names in the executive recruitment business.

Shareholders, however, were not consulted on Sir Ian's appointment before it was made. The company said it could not consult on every sensitive issue and that it was the board's job to make appointments. The decision to appoint Sir Ian surprised many, not least because of the opposition to his name when it emerged in the press that he had been approached to become chairman of Standard Chartered two years ago.