v) Pensions
The Company’s Defined Benefit Pension Plan was closed on 31 January 2002 and, as such, Justin King, Darren Shapland and Mike Coupe do not participate in it. For 2008/09, Justin King and Mike Coupe received pension supplements of 30 per cent of salary and 25 per cent of salary, respectively, in lieu of pension plan participation.
Darren Shapland participated in the JS Self Invested Pension Plan, a defined contribution arrangement which is open to all senior management, until 10 August 2008. Prior to this date, he contributed five per cent of his salary up to the Company’s earnings cap (2008: £117,600) whilst the Company contributed 12.5 per cent of salary up to the cap; a salary supplement equal to 25 per cent of his pensionable salary over the cap was paid to him. Upon his withdrawal from the Plan, he received a pension supplement equal to 25 per cent of his full salary.
vi) Benefits
Other benefits for Directors include the provision of company car benefits, life assurance, colleague discount and private medical cover.
Shareholding guidelines
To create greater alignment with the interests of shareholders and to be consistent with one of the objectives of the incentive framework, the Committee has proposed that all Executive Directors and Operating Board Directors should build up a shareholding in the Company over a five-year period starting from 2006/07 that is equal to their annual basic salary, and maintain it thereafter. At the year-end, Justin King held 548,962 shares, Darren Shapland held 442,355 shares and Mike Coupe 410,878 shares, in addition to their share scheme grants. At the year-end, based on the year-end share price, this represented 197 per cent, 270 per cent and 264 per cent of salary respectively.
Performance graph
The graph below shows the TSR performance of an investment of £100 in J Sainsbury plc shares over the last five years compared with an equivalent investment in the FTSE 100 Index. This has been selected to provide an established and broad based index.
Service contracts
Justin King has a service contract which can be terminated by contract is terminated without cause, the Company can request that he works his notice period or takes a period of garden leave, or can pay an amount in lieu of notice equal to one times basic salary for the notice period plus 75 per cent of basic salary in lieu of all other benefits including pension and bonus. In addition, if he is dismissed within six months of a change of control the above sum will become payable. The contract contains restrictive covenants, which continue for 12 months after termination.
If Darren Shapland’s or Mike Coupe’s service contracts are terminated without cause, the maximum payment they would receive would be equal to one times basic salary for the 12 month notice period plus 50 per cent of basic salary in lieu of all other benefits. They are required to mitigate their losses and would receive phased payments, which would be reduced or terminated if they secured alternative employment during the notice period. Their contracts also contain restrictive covenants, which continue for 12 months after termination. The contracts do not contain any specific provisions relating to change of control.
The Executive Directors’ service contracts became effective on the following dates:
| Contract date | |
|---|---|
| Justin King | 29 March 2004 |
| Darren Shapland | 1 August 2005 |
| Mike Coupe | 1 August 2007 |
Chairman
The Chairman does not have a service contract. His letter of appointment became effective on 19 July 2004. He was appointed for an initial term of three years renewable on a 12 month rolling basis thereafter by mutual consent. His appointment may be terminated at any time upon six months’ written notice from either party. He devotes such time as is necessary to perform his duties. The Chairman’s fees have remained unchanged since his appointment in 2004.
The Chairman does not participate in any performance related incentive plans.
Non-Executive Directors
Non-Executive Directors do not have service contracts. They are appointed for an initial three-year period, which may be extended for a further term by mutual consent. The initial appointments and any subsequent re-appointments are subject to election or re-election by shareholders. Their appointments may be terminated on three months’ notice from either side.
Non-Executive Directors are paid a basic fee in cash of £50,000 per annum with additional fees of £10,000 per annum being payable to the Senior Independent Director and to the Chairmen of the Audit, Remuneration and Corporate Responsibility Committees. The fees are reviewed annually by a sub-committee of the Board, consisting of the Chairman and one or more Executive Directors, which takes into account market rates and the specific responsibilities and time commitments of the role within Sainsbury’s and were last increased in March 2007. They will be reviewed in the autumn. Non-Executive Directors do not participate in any performance related incentive plans.
The Non-Executive Directors’ letters of appointment became effective on the following dates:
| Appointment date | |
|---|---|
| Anna Ford | 2 May 2006 |
| Val Gooding | 11 January 2007 |
| Mary Harris | 1 August 2007 |
| Gary Hughes | 1 January 2005 |
| John McAdam | 1 September 2005 |
| Bob Stack | 1 January 2005 |