Boots chief pockets over £1m

The health and beauty retailer's annual report and accounts revealed that Mr Baker earned almost £1.2m after bonuses were reintroduced. That marked a 15 per cent increase on the previous year, when no bonuses were awarded after Boots failed to meet business targets and profits fell 10 per cent.

Mr Baker, who negotiated Boots' merger with Alliance UniChem and sold its healthcare business last year, has since tried to reposition the company as "the health and beauty expert". The 43-year-old joined Boots from Asda, the supermarket group owned by the American retail giant Wal-Mart, in September 2003.

Details of his salary were revealed as Boots signalled that 35,000 workers were to carve up a £6.5m windfall, with full-time staff to receive nearly £250 in shares.

The Nottingham-based company, which has 1,400 shops, has been buffeted by fierce competition from supermarkets. That, in part, provided the impetus for its merger with the pharmacy wholesaler and retailer Alliance UniChem.

The merger, slated for completion at the end of next month, should create a group of sufficient size to take on the likes of Tesco in the sale of health and beauty products, with combined annual sales of over £13bn.

Boots expects cost savings of about £100m from the deal, which is likely to cost the pair about £42m, the lion's share of which will be paid to those advising on the £7bn deal.

The investment bank Goldman Sachs is banker to Boots, while its brokers are Merrill Lynch and UBS. Slaughter and May is providing legal advice. Alliance UniChem's banker is Merrill Lynch, its brokers are Credit Suisse, with Allen & Overy giving legal advice.