Sainsbury's chief Justin King reaps rewards of supermarket success

Sainsbury's chief executive Justin King landed £5m in pay and share bonuses last year for helping to turn around the supermarket chain, it emerged today.

Alongside £2.05m in pay, pension and bonuses, Mr King hit all the targets under the firm's Making Sainsbury's Great Again plan launched in 2005 - giving him nearly 900,000 shares with a value of just under £3m, according to the firm's annual report.

His rewards will continue this year as a further 831,000 shares vest under the same plan, and 195,000 shares under a separate incentive scheme - worth another £3.3m in total at the chain's current share price.

News of his package emerges a month after the UK's third biggest supermarket reported a better-than-expected 11 per cent hike in annual profits to £543m.

The haul means 120,000 staff will share a bonus pot of £60m, up from last year's £47m payout.

Under the turnaround plan, Mr King had to grow sales by £2.5bn as well as growing the group's earnings per share by 21 per cent over the four-year period. Both targets were exceeded by the firm.

Mr King also stands to benefit from further share awards in coming years, the annual report said.

The chief executive was last year granted a potential maximum of 630,876 shares worth £2.1m under its 2006 long-term incentive share scheme. These shares will vest in 2011 depending on performance.

Meanwhile under a third incentive programme, the deferred annual bonus scheme, Mr King invested 50 per cent of his bonus in 158,042 shares.

This will be matched by a further 316,000 shares by the company in 2011 - worth another £1m - if Sainsbury's excels in comparison to rival retailers including Morrisons, Tesco, Next and Marks & Spencer.