Sainsbury's shareholders to call for 'completely different board'

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The Independent Online

Shareholders are planning to urge J Sainsbury's new chairman, Philip Hampton, to make sweeping changes to the board of the struggling supermarket chain.

Mr Hampton, most recently finance director of Lloyds TSB, was named chairman last week, replacing the ousted Sir Peter Davis. The former chairman left under a cloud, with investors horrified at the size of his potential £2.4m bonus, after a dire performance by the company. In addition, Sir Peter could receive a £2m-plus golden parachute.

The growing scandal over Sir Peter's remuneration, coming so soon after the row involving Sir Ian Prosser - named chairman designate without prior shareholder consultation - has angered shareholders. One leading investor said he wanted Mr Hampton to announce "a completely different board" within nine months.

The shareholder said he was confident the new chairman would not be afraid to make changes. "Philip Hampton is just the man to do this. He will take no prisoners. I wouldn't have thought that anybody's job is safe under Hampton."

Pressure is building on the remuneration committee that sanctioned Sir Peter's bonus, and its chairman, Keith Butler-Wheelhouse. The shareholder added: "He is chairman of the remuneration committee, and given the policy and how it's failed, [Mr Butler-Wheelhouse] must question his position."

The National Association of Pension Funds, whose members manage assets worth £600bn, said it had "serious concerns with the lack of effective shareholder relations exhibited by the company in recent months".

The Association of British Insurers, meanwhile, has placed Sainsbury's on "red top", its highest level of concern over corporate governance issues

The performance of Justin King, the retailer's chief executive, is also likely to be reviewed by Mr Hampton. However, the former Marks & Spencer executive has only been in the job since March, and is not due to reveal his full turn-around strategy until October.

But the City is banking on changes being made by Mr Hampton regardless. One shareholder said that management changes were already factored into Sainsbury's share price: "Explain to me why the business is trading at a premium to Tesco when the company's moving in the opposite direction."

Rumours have also been circulating that Sainbury's could become the latest retail takeover target, although City sources are still unsure who would be in a position to pursue such a bid.

Mr Hampton is known for his merger and acquisition experience, helping to orchestrate asset sales worth around $5bn (£2.7bn) while at Lloyds TSB.