Morrison's chief executive Stott set for pay-off worth £2.6m

Bob Stott, whose days as Wm Morrison's chief executive are numbered, is in line for a potential £2.6m golden handshake when the group eventually finds his successor, it emerged yesterday.

Despite a dire year that saw the supermarket group's profits wiped out by its disastrous integration of Safeway, Morrisons handed its top executives bumper pay rises and lucrative new two-year contracts.

The company's annual report, published yesterday, shows Mr Stott's base salary soared 33 per cent to £650,000, while Sir Ken Morrison, the chairman, enjoyed a 19 per cent pay increase to £675,000. The generous pay rises were made at the instigation of David Jones, the deputy chairman, who felt that directors' remuneration packages "were not fully competitive".

One industry source said shareholders were "not particularly happy" at such generosity given the scale of losses amassed during Morrisons' bungled integration process.

The group's top executives can look forward to a better package next year with a new long-term incentive plan, which will be a first for the company. In the meantime, a new annual bonus plan offers each executive director, including Sir Ken, the chance to double his or her basic salary if they hit profit and personal targets.

Morrisons has said it hopes to announce Mr Stott's replacement before its annual meeting on 25 May. It said Mr Stott would stay on for a handover period and then leave with a payment worth "two times his salary, profit share and certain benefits". Even then he will pocket a consultant's salary for the next 12 months.

Mr Stott earned £698,000 last year, up from £539,000 the previous year, while Sir Ken took home £738,000, up from £635,000. Both received bonuses of about £30,000. Mr Jones was paid £282,000 after his salary was reduced from £460,000, reflecting fewer hours spent on Morrisons' affairs.Martin Ackroyd, fired as finance director after a dispute between Sir Ken and Mr Jones last year, was paid £506,000 in compensation.