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Annual Report and Financial Statements 2003
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This report is made by the Board on the recommendation of the Remuneration Committee. The first part of the report provides details of remuneration policy. The second part provides details of the remuneration, pensions and share interests of the Directors for the year ended 29 March 2003. The Directors confirm that this report has been drawn up in accordance with the Combined Code and the Directors’ Remuneration Report Regulations.
 
Remuneration Committee
 
The Remuneration Committee meets at least three times a year. Its responsibilities include setting the remuneration policy for all Executive Directors and determining the remuneration for individual Executive Directors. It is chaired by
Keith Butler-Wheelhouse and comprises all of the Non-Executive Directors, namely Sir George Bull, June de Moller, Jamie Dundas, Lord Levene and Bridget Macaskill. During the year, the Committee received advice on general remuneration matters from Linklaters and Towers Perrin, who were instructed by the Company, and on specific issues from ABN Amro and UBS Warburg, who were instructed by the Committee. They also provided various banking, legal and employee benefit services to the Company. The Committee has appointed Towers Perrin to provide advice direct to the Committee for the new financial year. The Committee considers the views of the Group Chief Executive and the Group HR Director when reviewing the remuneration of the other Executive Directors, but neither is involved in discussions concerning their own remuneration.
 
Remuneration policy
 
The Remuneration Committee adopted a remuneration policy in 2002 consistent with the Company’s business objectives which:
  • attracts, retains and motivates high calibre Directors;
  • in general terms, sets base salary broadly in line with median market practice, whilst moving total remuneration towards upper quartile market levels for superior performers;
  • creates overall packages in which performance related elements form a significant proportion;
  • reinforces the performance orientated culture by providing enhanced rewards for stretch performance;
  • supports short-term and long-term incentive plans which are targeted at both personal and Company performance;
  • aligns the interests of Directors with those of the shareholders by linking share and cash incentive payments to performance; and
  • is based on information from a range of remuneration sources, which takes into account the retail sector as well as other large companies of a comparable size and complexity.
The policy will continue to apply for the next financial year. For subsequent years, the Committee will review the policy on a regular basis and recommend changes as and when appropriate.
 
The main components of Executive Directors’ remuneration are set out below:
 
i) Basic salary
 
Basic salary for each Director is determined taking into account professional advice based on assessments of the Director’s performance, experience and responsibilities, and advice on market factors, which provides the best available benchmark for the Director’s specific position.
 
ii) Incentive arrangements
 
In addition to basic salary, the Company maintains incentive arrangements which combine an annual bonus plan with long-term incentive share plans. The Committee believes that these arrangements provide rewards which reflect an appropriate balance between personal and Company performance. As such, they align the rewards of Directors with the Company’s immediate business priorities and the long-term interests of shareholders.
 
The proportion of each Director’s total remuneration that is performance related is significant. Approximately 70 per cent of the Group Chief Executive’s total remuneration is linked to performance, assuming target level is achieved under the bonus plan and that the Board agrees to the release of half of the total number of shares available for 2003/04 performance under the Share Award Plan described below.
 
For the other Executive Directors, the proportion of total remuneration delivered through bonus and under the Performance Share Plan is 40 per cent, assuming target levels are achieved. Share options also provide a performance rated incentive, but as the exercise prices of all outstanding grants were above the market price of Sainsbury’s shares at the year end, they are not included within this percentage. If the share price were to increase, the proportion of performance related remuneration would be higher.
 
In order to maximise value from the incentive plans, performance measures are designed to ensure that participants are not rewarded for the delivery of the same measures through different elements of the package. Accordingly, relative total shareholder return is the measure for the Performance Share Plan, which rewards executives for maximising shareholder returns over the medium term, whilst earnings per share growth applies to the Executive Share Option Plan, which ensures that executives are focused on the underlying financial performance of the business as well as on absolute share price growth. The performance measures for the Share Award Plan focus on the achievement of specific profit targets and key business milestones, and the successful implementation of succession plans.
 
The incentive arrangements may be summarised as follows:
 
Annual Bonus Plan
 
A cash bonus is awarded subject to a condition based on year on year profit growth and individual targets, which are key to the businesses’ performance. The bonus is a percentage of basic salary, with a maximum of 80 per cent for Executive Directors, other than the Group Chief Executive, whose maximum award is 100 per cent of basic salary. That part of the bonus relating to Company performance will only be paid if the threshold level of year on year profit growth has been achieved and a pro rated bonus will then be paid up to a maximum level of profit growth. That part of the bonus relating to individual targets can be earned if any year on year profit growth is achieved and the maximum which can be earned for individual targets is 20 per cent of basic salary. Bonuses are not pensionable.
 
Performance Share Plan
 
This Plan allows shares to be allocated to individuals on a conditional basis, but not released unless the performance criterion is met over the three year performance period. The number of shares actually released depends upon the Company’s performance compared with 12 comparator companies (namely Ahold, Boots, Carrefour, Dixons, GUS, Kingfisher, Marks & Spencer, Morrisons, Next, Safeway, Somerfield and Tesco). In future years Casino and Loblaw will be added to the comparator group. The Company’s relative performance is determined by reference to Total Shareholder Return, being the increase in the value of a share, including reinvested dividends, over a three year period. If the performance criterion is satisfied, the individual is granted an option to acquire the shares which can be exercised over the following 10 years.
 
In 2002, the Committee revised the Plan to strengthen the link between rewards and Company performance. Under the revised structure, no awards will be made unless median performance is achieved at the end of the three year performance period. At median level, shares to the value of 30 per cent of salary will be released and the award will be pro rated at every position between the median and first position in the comparator group. The maximum allocation for Directors is a conditional grant of shares equal to 75 per cent of salary. This performance measure will apply to conditional awards made in 2003. Sir Peter Davis does not participate in this plan.
 
Executive Share Option Plan
 
At last year’s Annual General Meeting, shareholders approved the Executive Share Option Plan 2002. The maximum annual option award is two times basic salary and the actual grants are agreed by the Committee according to the assessed performance and potential of participants. The exercise of options is conditional upon a performance target based on the growth in the Company’s underlying earnings per share (before goodwill and exceptionals) (‘EPS’) relative to inflation over a three year period. The Committee reviews the performance condition prior to the annual award of options to ensure that it is set at appropriately challenging levels. For the 2003/04 grant, no options will be exercisable for average annual real growth of less than 3 per cent per annum over the three year performance period, 50 per cent of the option will be exercisable if average real growth of 3 per cent per annum is achieved and, for average real growth of 5 per cent per annum, the option is exercisable in full, with a pro rating between 3 per cent and 5 per cent. EPS is measured against a fixed starting point over a performance period of three financial years beginning with the year in which the option is granted. To the extent that the condition is not satisfied in full after three years, it will be retested over four and then over five financial years. To the extent the condition is not met after five financial years, the option will lapse.
 
Share Award Plan 2003
 
On 14 March 2003, the Company announced that, at the request of the Board, Sir Peter Davis had agreed to extend his time with the Group and will assume the role of Chairman on 29 March 2004. In conjunction with the appointment, the Board believed that it was appropriate to award a package of restricted shares in the Company to Sir Peter in respect of his extended term in office. The new award will be in the form of conditional awards of restricted shares to be released on 31 July 2005, subject to the achievement of specific profit targets and business milestones set by the Committee and dependent on the successful implementation of succession plans. Accordingly on 27 March 2003, two conditional awards of one million shares and 500,000 shares were made to Sir Peter under the terms of the restricted Share Award Plan, to be held by the Company’s Employee Share Ownership Trust and released to him on 31 July 2005 provided that he remains in employment as Chairman until that date and that the following conditions have been met:
 
a) 300,000 shares will be released if:
  • business transformation targets and timescales (in respect of the renewal of the supply chain network, the implementation of new IT systems and the programme for introducing new store formats, opening new stores and extending and updating stores) have been achieved (in the reasonable opinion of the Board) in line with the agreed programme for 2003/04; and
  • to the extent the same is within Sir Peter’s control, he has used his best endeavours to procure that a new Group Chief Executive designate is appointed (acceptable to the Nomination Committee) by 31 March 2004 or such longer period as the Board decides; and
  • a Non-Executive Deputy Chairman has been appointed (acceptable to the Nomination Committee) by 31 March 2004;
b)  700,000 shares will be released if the Company’s profits for 2003/04 are at least 90 per cent of the profit level agreed by the Board in the financial, budgeting and corporate planning process. 350,000 shares will be released if at least 70 per cent of the agreed profit level has been achieved, with a pro rata number of shares between 350,000 and 700,000 being released for profit between 70 per cent and 90 per cent of the agreed profit level.
 
The second award will be released to Sir Peter on 31 July 2005 if the following conditions have been met:
 
a) 300,000 shares will be released if:
  • business transformation targets and timescales (in respect of the renewal of the supply chain network, the implementation of new IT systems and the programme for introducing new store formats, opening new stores and extending and updating existing stores) have been achieved (in the reasonable opinion of the Board) in line with the agreed programme for 2004/05;
  • to the extent the same is within Sir Peter’s control, he has used his best endeavours to procure that the new Group Chief Executive and the Non-Executive Deputy Chairman have been introduced to their new responsibilities and supported appropriately by him by 31 March 2005;
b)  200,000 shares will be released if the Company’s profits for 2004/05 are at least 90 per cent of the profit level agreed by the Board in the financial, budgeting and corporate planning process. 100,000 shares will be released if at least 70 per cent of the agreed profit level has been achieved, with a pro rata number of shares between 100,000 and 200,000 for profit between 70 per cent and 90 per cent of the agreed profit level.
 
The Board shall (other than in circumstances of early vesting) be capable of adjusting the number of shares to be released referable to profit and business transformation targets downwards or upwards if, in the reasonable opinion of the Board, the Company has in the relevant financial year materially underperformed or outperformed by comparison with other publicly quoted food retailers.
In relation to leaving the Company or a change in control occurring the following will apply:
  • subject to the following points, where Sir Peter leaves before the release date for the shares, the award will lapse and no shares will be received.
  • either if Sir Peter leaves before the release date of the shares due to:
    • early retirement agreed by the Board; or
    • dismissal (including constructive dismissal) by the Company (other than for cause); or
    • death
or, if there is a change in control,
 
then the awards will vest and the shares will be received on the date of leaving or the date of the change in control (as the case may be: the ‘vesting event’). The number of shares received referable to profit will be calculated by reference to the budgeted profit for the period from the commencement of the relevant financial year up to the vesting event. If the vesting event occurs in the financial year 2003/04 then the award related to profit for 2004/05 shall be 50 per cent of the number of shares to be released in relation to 2003/04. The business transformation targets shall be deemed satisfied.
 
iii) Other share schemes
 
In order to encourage share ownership, the Company provides two all employee share plans for its UK employees, namely the Savings Related Share Option Scheme and the Share Incentive Plan, which has two parts, the Commitment Shares Plan and the Share Purchase Plan. Directors may participate in these plans in the same way as all other colleagues. The final payment under the Employee Profit Sharing Scheme was made in August 2002.
 
Performance Graph
 
The graph below shows the Total Shareholder Return (‘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.
Graph showing the Total Shareholder Return (‘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.
Over a three year period from 31 March 2000, the Company’s TSR outperformed the FTSE 100 Index by 48 per cent.
 
iv) Pensions
 
Executive Directors are members of the J Sainsbury Executive Pension Scheme, a funded, Inland Revenue approved, defined benefit final salary occupational pension scheme. Under the Group’s pension arrangements, Directors are entitled after a minimum of 20 years of pensionable service to a pension on retirement at age 60 (or earlier in the event of 40 years’ service, or ill health) of up to two thirds of their pensionable earnings (defined as basic salary in the last 12 months of service) subject to Inland Revenue limits. Pensions are also payable to dependants on death and a lump sum is payable if death occurs in service.
 
With effect from March 2004, the Company will be introducing a new scale of benefits with pension payments based on career averaged salary. Executive Directors may choose which scale of benefits will apply to them from that date. If they opt to switch to the new career average scale, they will continue to contribute at the current rate of 4.25 per cent of basic salary. If they wish to retain the current scale of benefits based on their final basic salary, their contributions will increase to 7 per cent of basic salary.
 
External appointments to the Board are eligible to become members of the Executive Stakeholder Pension Plan which is a defined contribution arrangement.
 
v) Benefits
 
Other benefits for Executive Directors include the provision of company car benefits and free medical insurance.
 
Service contracts
 
Sir Peter Davis has an amended service contract which (unless terminated earlier or renewed by mutual agreement) will now terminate automatically on 31 July 2005. John Adshead, Roger Matthews, Stuart Mitchell and Sara Weller have rolling service contracts which can be terminated by either party by giving 12 months’ written notice and if any of these service contracts is terminated without cause (otherwise than in circumstances where the Company is entitled to terminate by summary notice) the Company will pay an amount equal to one times basic salary for the notice period plus 75 per cent of basic salary in lieu of all other benefits. In addition, if a Director is dismissed within six months of a change of control the above sum will become payable.
 
The Executive Directors’ service contracts became effective on the following dates:
 
Executive Director Contract date
 
John Adshead 2 March 2000
Sir Peter Davis 17 January 2000*
Roger Matthews 8 May 2000
Stuart Mitchell 22 June 2002
Sara Weller 4 July 2002
 
 
* Supplemental agreement entered into on 14 March 2003.
 
Non-Executive Directors, including the Chairman, do not have service contracts. They are appointed for an initial two year period and thereafter by mutual consent on a yearly basis. The initial appointment and any subsequent re-appointment is subject to election or re-election by shareholders. Non-Executive Directors are paid a basic fee with additional fees being payable for chairing a Board Committee. The level of fees is reviewed against market practice, taking into account the required time commitment. They do not participate in any performance related plans.
 
The following section provides details of the remuneration, pension and share interests of all the Directors for the year ended 29 March 2003 and has been audited.
 
Directors’ remuneration
 
The remuneration of the Directors for the year was as follows:
 
  Note Salary
£000 		Bonus6
£000		 Profit
sharing7
£000 		Compensation
for loss
of office
£000 		Benefits8
£000		 Total
2003
£000 		Total
2002
£000
 
Executive Directors                
John Adshead CBE   340 166 4 – 28 538 476
Ian Coull 1 258 – 4 – 21 283 469
Sir Peter Davis 2 800 408 9 – 2 1,219 1,098
Roger Matthews   405 195 4 – 28 632 562
Stuart Mitchell 3 350 181 4 – 21 556 110
Sara Weller 3 350 167 3 – 16 536 110
                 
Non-Executive Directors                
Sir George Bull   250 – – – 27 277 245
Keith Butler-Wheelhouse   35 – – – – 35 29
June de Moller   30 – – – – 30 25
Jamie Dundas   35 – – – – 35 30
Lord Levene 4 30 – – – – 30 23
Bridget Macaskill 5 30 – – – – 30 4
Directors who left the Board before the start of the financial year including compensation for loss of office   – – – – – – 971
 
Total 2003   2,913 1,117 28 – 143 4,201  
 
Total 2002   2,568 914 19 525 126   4,152
 
   
1  Retired as a Director on 31 December 2002.
2 Highest paid Director.
3 Appointed as a Director on 1 January 2002.
4 Appointed as a Director on 1 May 2001.
5 Appointed as a Director on 1 February 2002.
6 Includes performance bonuses earned in the period under review but not paid in the financial year.
7 Profit sharing amounted to 1.17 per cent of qualifying pay.
8 Benefits include company car benefits and medical insurance.
 
 
Pensions
 
The pension entitlements of the Directors for the year were as follows:
 
  Age at
29 March
2003
i
years		 Accrued
pension
at
29 March
2003
ii
£000		 (1)

 		 Directors’
  contri-
butions
during
the year
iii
£000		 Increase
in
accrued
pension
during
the year
iv
£000		 Increase
in
accrued
pension
during
the year
(net of
inflation)
v
£000		 Transfer
value of
increase
in accrued
pension
during
the year
(net of
inflation)
and net of
Directors’
 contri-
butions
vi
£000		 (2)
 
 
 
 
 
  		Transfer
value of
accrued
pension
at
29 March
2003
vii
£000		 (2)
 
  		Transfer
value of
accrued
pension
at
30 March
2002
viii
£000		 (2)
 
  		Increase
in transfer
value over
the year net
of Directors’
contributions
=(vii)-(viii)-(iii)
ix
£000
 
John Adshead CBE 58 198   14 25 22 354   3,307   2,785   508
Sir Peter Davis 61 80   34 28 27 381 (4) 1,224 (4) 854 (5) 336
Roger Matthews 48 45   17 15 14 100   365   320   28
Stuart Mitchell 42 119   15 23 21 113   714   758   (59)
Sara Weller 41 35   15 15 15 72   207   156   36
Ian Coull 52 150 (3) 11 14 12 129 (3)(7) 2,312 (6) 1,738   563
 
   
1 The accrued pensions are the amounts that would be paid if the Director left service at the relevant date.
2 The transfer values have been calculated in accordance with the guidance note ‘GN11’ published by the Institute of Actuaries and Faculty of Actuaries.
3 Retired as a Director on 31 December 2002.
4 Allows for a retirement date of July 2005.
5 Allows for a retirement date of March 2004.
6 Allows for enhanced value of immediate early retirement pension of £105,000 per annum.
7 No allowance made for additional liability arising from immediate payment of pension.
   
 
The transfer values represent the capital sum that would need to be appropriately invested to provide the relevant pension assuming it is paid from the Executive Director’s normal retirement age (or at the date of retirement for Directors who retired during the year). The accrued pension entitlement shown is the amount that would be paid each year following retirement based on retirement at age 60 (or at the date of retirement for Directors who have retired during the year). Members of the scheme have the option of paying additional voluntary contributions. Neither these contributions nor the resulting benefits are shown in the above table.
 
In the case of Sir Peter Davis, John Adshead, Roger Matthews and Sara Weller, the Company has agreed to make up that portion of the standard pension entitlement which is in excess of Inland Revenue limits. This obligation is unfunded, although full provision of £2,552,000 has been made in respect of the period ended 29 March 2003 (2002: £1,616,000).
 
Performance Share Plan
 
Under the Plan, shares conditionally allocated to individuals are released to them in the form of options if the performance condition is met at the end of the three year performance period.
 
 
  Number
of shares
conditionally
allocated
31 March
2002		 Lapsed
during
the year		 Number
of shares
conditionally
allocated
during
the year		 Mid market
price on
date of
conditional
allocation
(pence)		 Options
granted
during
the year
under the
plan		 Mid market
price on
day option
granted
(pence)		 Number
of shares
conditionally
allocated
29 March
2003		 End of
performance
period
 
John Adshead CBE                
26 July 1999 36,096 6,029 – 374 30,067 287 –  
2 June 2000 55,146 55,146 – 272 – – – 29.03.03
7 June 2001 37,470 – – 427 – – 37,470 27.03.04
30 May 2002 – – 68,918 370 – – 68,918 26.03.05
                 
Ian Coull                
26 July 1999 38,101 6,363 – 374 31,738 287 –  
2 June 2000 55,146 55,146 – 272 – – –  
7 June 2001 37,470 37,470 – 427 – – –  
30 May 2002 – 68,918 68,918 370 – – –  
                 
Roger Matthews                
2 June 2000 62,500 62,500 – 272 – – – 29.03.03
7 June 2001 44,496 – – 427 – – 44,496 27.03.04
30 May 2002 – – 82,094 370 – – 82,094 26.03.05
                 
Stuart Mitchell                
26 July 1999 11,978 2,001 – 374 9,977 287 –  
2 June 2000 37,223 37,223 – 272 – – – 29.03.03
7 June 2001 28,981 – – 427 – – 28,981 27.03.04
30 May 2002 – – 70,945 370 – – 70,945 26.03.05
                 
Sara Weller                
2 June 2000 41,359 41,359 – 272 – – – 29.03.03
7 June 2001 30,035 – – 427 – – 30,035 27.03.04
30 May 2002 – – 70,945 370 – – 70,945 26.03.05
 
   
1 The above figures for 2001 show the maximum awards that will be released if the Company achieves the upper quartile position within the comparator group at the end of the three year performance period. No shares will be released if the Company’s position at the end of the three year period is below the median; 50 per cent of the shares will be released at median performance; the full award will be released at upper quartile performance, and between median and upper quartile performance pro rata awards will be made.
2 The above figures for 2002 show the maximum awards that will be released if the Company achieves first position within the comparator group. Shares to the value of 30 per cent of salary will be released at median performance. Awards will be pro rated at every position between the median and first position in the comparator group.
3 Ian Coull retired as a Director on 31 December 2002.
4 Sir Peter Davis does not participate in the plan.
   
 
The following table shows the options that were granted during the year as a result of the partial satisfaction of the performance condition attaching to the conditional allocation awarded in 1999.
 
           
  Number of options        
     
  31 March
2002		 Granted
during
the year		 Exercised
during
the year		 Mid
market
price on
date of
exercise
(pence)		 Gains
on
option
exercises
(£)		 Lapsed
during
the year		 29 March
2003		 Total
exercise
price
(pence)		 Inherent
profit
(£)		 Date
from
which
exercisable		 Date of
expiry
Performance
Share Plan 		                     
 
John Adshead CBE – 30,067 – – – – 30,067 100 67,950 29.05.02 28.05.12
Ian Coull – 31,738 31,738 324.25 102,909 – – 100 –    
Stuart Mitchell – 9,977 – – – – 9,977 100 22,547 29.05.02 28.05.12
 
   
 
 
The inherent profit figures have been calculated by reference to a mid market price of the Company’s shares on 29 March 2003 of 226 pence and assume that all unexercised options were exercised on that date.
 
Options over ordinary shares
 
At the end of the year, the Directors’ share options were as follows:
 
 
Executive Share
Option Plan with
no performance
conditions 		Number of options Weighted
average
exercise
price
(pence)		 Range
of
exercise
prices
(pence)		   Date
   
31 March
2002		 Granted
during
the year		 Exercised
during
the year		 Lapsed
during
the year		 29 March
2003		 From
which
exercisable		 Of
expiry
 
John Adshead CBE 119,437 – – 45,482 73,955 359 359   12.03.97 12.03.04
Ian Coull 101,062 – – 101,062 – – –   – -
Stuart Mitchell 10,290 – – 10,290 – – –   – -
 
   
1 No performance condition applied in accordance with market practice at the date of grant.
2 Ian Coull retired as a Director on 31 December 2002.
   
 
Executive Share
Option Scheme with
performance
conditions 		Number of options Weighted
average
exercise
price
(pence)		 Range
of
exercise
prices
(pence)		   Date
   
Note 31 March
2002		 Granted
during
the year		 Exercised
during
the year		 Lapsed
during
the year		 29 March
2003		 From
which
exercisable		 Of
expiry
 
John Adshead CBE 1 60,631 – – – 60,631 475 475   08.09.98 05.09.05
  2 108,959 – – – 108,959 478 367-545   20.05.00 10.11.08
  3,5 181,817 – – – 181,817 314 272-377.5   02.08.02 02.06.10
  4,5 153,565 – – – 153,565 417 407-427   07.06.04 26.07.11
  6 – 236,933 – – 236,933 287 287   25.07.05 24.07.12
Ian Coull 1 68,210 – – 68,210 – – –   – –
  2 120,402 – – 120,402 – – –   – –
  3,5 185,790 – – 185,790 – – –   – –
  4,5 153,565 – – 153,565 – – –   – –
  6 – 236,933 – 236,933 – – –   – –
Sir Peter Davis 3,5 3,009,596 – – – 3,009,596 260.5 260.5   01.03.03 01.03.10
Roger Matthews 3 231,333 – – – 231,333 294 272-319.75   24.11.02 02.06.10
  4 182,358 – – – 182,358 417 407-427   07.06.04 26.07.11
  6 – 282,229 – – 282,229 287 287   25.07.05 24.07.12
Stuart Mitchell 1 21,157 – – – 21,157 475 475   08.09.98 05.09.05
  2 49,632 – – – 49,632 447 367-545   20.05.00 10.11.08
  3 116,627 – – – 116,627 303 272-377.5   02.08.02 02.06.10
  4,5 131,969 – – – 131,969 417 407-427   07.06.04 26.07.11
  6 – 243,902 – – 243,902 287 287   25.07.05 24.07.12
Sara Weller 3 179,547 – – – 179,547 293 272-319.5   17.01.03 02.06.10
  4 136,768 – – – 136,768 417 407-427   07.06.04 26.07.11
  6 – 243,902 – – 243,902 287 287   25.07.05 24.07.12
 
 
1 Performance condition of 2.5 per cent real annual average growth in EPS over a rolling three year period up to the tenth anniversary of the grant.
2 Performance condition of 2.0 per cent real annual average growth in EPS over a rolling three year period up to the tenth anniversary of the grant.
3 Performance condition of 3.0 per cent real annual average growth in EPS over a rolling three year period up to the tenth anniversary of the grant.
4 Performance condition of 3.0 per cent real annual average growth in EPS over the three years from the date of grant, which if not satisfied is retested over a 4 year period. If the performance condition is not met after the fourth year the option lapses.
5 For each of (3) and (4) above, the performance condition is increased to 4.0 per cent real annual average growth in EPS to the extent that the total value of outstanding options was in excess of four times basic salary at the date of grant.
6 Performance conditions are set out here.
7 The performance conditions relating to grants up to and including 2 June 2000 have been met.
8 Ian Coull retired as a Director on 31 December 2002.
   
 
Savings Related Share
Option Scheme		 Number of options Weighted
average
exercise
price
(pence)		 Range
of
exercise
prices
(pence)		   Date
   
31 March
2002		 Granted
during
the year		 Exercised
during
the year		 Lapsed
during
the year		 29 March
2003		 From
which
exercisable		 Of
expiry
 
John Adshead CBE 2,080 1,107 – 474 2,713 275 239-301   01.03.03 31.08.06
Ian Coull 4,877 – – 4,877 –          
Sir Peter Davis 4,384 – – – 4,384 301 301   01.03.07 31.08.07
Roger Matthews 2,571 – – – 2,571 300 299-301   01.03.04 31.08.05
Stuart Mitchell 4,230 – – – 4,230 318 253-416   01.02.04 31.08.07
 
 
1 The Savings Related Share Option Scheme is an all employee share option scheme and has no performance conditions as per Inland Revenue Regulations.
2 Ian Coull retired as a Director on 31 December 2002.
   
 
The options outstanding under the Company’s Executive Share Option Plan and Savings Related Share Option Scheme are exercisable at prices between 239 pence and 545 pence.
 
In the period from 31 March 2002 to 29 March 2003, the highest mid market price of the Company’s shares was 422 pence and the lowest mid market price was 220 pence and at 29 March was 226 pence. As at that date, all exercise prices exceeded 226 pence and accordingly no inherent profit arose under the Executive Share Option Plan or the Savings Related Share Option Scheme.
 
Directors’ interests
 
Directors’ interests in the ordinary shares of the Company and shares held in trust on behalf of Directors are as follows:
 
  Ordinary shares2   Ordinary shares6
   
30 March
2002		 29 March
2003		 20 May
2003
 
Executive Directors        
John Adshead CBE 69,345 72,226   72,323
Sir Peter Davis 101,106 103,397   103,494
Roger Matthews 50,391 51,295   51,295
Stuart Mitchell 12,407 14,393   14,490
Sara Weller 243 3,472   3,569
Non-Executive Directors        
Sir George Bull 20,000 25,000   25,000
Keith Butler-Wheelhouse 3,300 3,300   3,300
June de Moller 1,500 1,500   1,500
Jamie Dundas 1,200 1,200   1,200
Lord Levene 2,500 2,500   2,500
Bridget Macaskill – 2,500   2,500
 
 
1 The above table has not been audited.
2 Ordinary shares are beneficial holdings which include the Directors’ personal holdings and those of their spouses and minor children, as well as holdings in family trusts of which a Director or his minor children are beneficiaries or potential beneficiaries. They also include the beneficial interests in shares which are held in trust under the J Sainsbury Profit Sharing Scheme and the Sainsbury’s Share Purchase Plan.
3 The Executive Directors are potential beneficiaries of the Company’s employee benefit trusts, which are used to satisfy awards under the Company’s employee share plans, and are therefore treated as interested in the 24.8 million (2002: 25.1 million) shares held by the Trustees.
4 The Company’s Register of Directors’ Interests contains full details of Directors’ interests, shareholdings and options over ordinary shares of the Company.
5 Ian Coull retired as a Director on 31 December 2002 and had a reportable interest on that date over 47,473 (2002: 46,101) ordinary shares.
6 Changes to the Directors’ interests in ordinary shares between 30 March 2003 and 20 May 2003 occurred as a result of purchases under the Company’s Share Purchase Plan.
 
  Approved by the Board on 20 May 2003
   
  Keith Butler-Wheelhouse
Chairman of the Remuneration Committee

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