Sainsbury announced Mike Coupe to succeed Justin King as company’s CEO

Sainsbury’s today announces that Justin King has decided to step down in July 2014 after 10 years as CEO, and that Mike Coupe, currently the Group Commercial Director, will succeed him as CEO.

London, UK, 2014-1-29 — /EPR Retail News/ — David Tyler, Chairman said: “Justin is a truly exceptional leader, who has reshaped Sainsbury’s during his 10 years as CEO, as well as playing a leading role in the sector and wider business world. The Board thanks him for his outstanding achievements in ‘Making Sainsbury’s Great Again’. He leaves a lasting legacy, with the Company stronger than ever.

“We are delighted to appoint a CEO of Mike’s unique talent and experience as Justin’s successor to lead the next chapter of Sainsbury’s history. No one knows Sainsbury’s – or the industry – better than Mike. He has worked hand-in-hand with Justin over the past decade and has a proven track record of success making him the natural choice to take the Company forward.”

Justin King, CEO said: “This was not an easy decision for me to make, and in truth it will never feel like the right time to leave a company like Sainsbury’s. It has been a privilege to have led the Company for the past 10 years and I am incredibly proud of our achievements in that time. It is the 157,000 colleagues that make Sainsbury’s so special and I would like to thank them for their amazing efforts over the last decade in making Sainsbury’s great again. I am confident that under Mike’s leadership the business will go from strength to strength.”

Mike Coupe, CEO designate said: “It’s an absolute honour to be appointed as the new CEO of Sainsbury’s in this, the Company’s 145th year, and at a time when thanks to Justin’s leadership, we have been consistently outperforming the market. I very much look forward to building on that success for our customers, colleagues, suppliers and shareholders.”

Notes to editors

Justin will stand down as CEO at the AGM on 9 July 2014
Mike Coupe will continue as Group Commercial Director and CEO Designate in the interim
John Rogers continues as Chief Financial Officer

Sainsbury’s 2004 – 2014

1. 10m additional customers a week

c24m transactions a week in 2014 (vs 14m in April 2005)
Excellent customer service winning 14 of 30 Mystery Shopper awards for Service & Availability in 2013/14 (The Grocer)
Supermarket of the Year 2013 (6th time in eight years – Retail Industry Awards)
Brand of the Year 2013 (Marketing Society)
FTSE100 Business of the Year 2013 (National Business Awards)

2. £9.5bn of incremental sales

£16.1bn in 2004/5 (vs £25.6bn for 2012/13)

3. Underlying profits almost trebled

£254m in 2004/5 (vs £756m 2012/13)
Over £600m operational cost savings since 2008/9
Underlying operating margin up to 3.56% in 2012/13 (from 2.15% in 2004/5)

4. Market share continuing to grow

17.1% (Kantar 12 weeks to 5 January)

5. Compelling non-food business

7th biggest clothing retailer in the UK by volume, 11th by value
7th biggest GM retailer in the UK by value
Full offer in over 400 stores with 1/3rd of the population now within a 15 minute drive

6. Scale convenience business

Nearly 600 convenience stores now opened (596 compared to 262 in 2004/5)
Awarded Convenience Chain of the Year (4th consecutive year – Retail Industry Awards)

7. Strong online business

£1bn online grocery business with over 190,000 orders each week
Online Retailer of the Year 2013 (2nd consecutive year – Grocer Gold Awards)

8. Sainsbury’s Bank

Five consecutive years of profit growth
Acquisition of remaining 50% stake from Lloyds Bank Group completes on 31 January 2014

9. Values a strategic point of difference

Leading positions on nutritional labelling, British sourcing, Fairtrade, RSPCA Freedom Foods and MSC
£136m worth of Active Kids equipment donated since 2005
First sole-sponsor of the Paralympic Games in 2012

10. Colleagues at the heart of our success

Record levels of colleague engagement (as measured by our annual Talkback survey)
Only food retailer accredited to Gold Standard by Investors in People
£520m to colleagues in bonuses (2005/6-2012/13)
Employer of the Year 2013 (Retail Week Awards)

Remuneration

The following information is provided in accordance with section 430(2B) of the Companies Act 2006.

Justin King will receive no annual bonus or Deferred Share Award for 2014/15, and will receive no awards under the Long-Term Incentive Plan (“LTIP” – known as Value Builder or Future Builder) for 2014/15. He will remain eligible for consideration for payment of an annual bonus and Deferred Share Award for 2013/14, subject to performance over this period and determined in the normal manner after the year end.

Under the terms of his contract, Justin could be entitled to a cash severance payment of up to 175% of his base salary (worth potentially up to £1.7m) at departure. However, he has offered to waive the cash entitlement and the Remuneration Committee has therefore determined that:

There will be no payment in lieu of notice
There will be no acceleration of vesting for any share awards
The 2012/13 and 2013/14 Deferred Share Awards will subsist in full and will be released at the end of the deferral period.
The performance period for the 2011 LTIP award is due to end in March 2014, prior to Justin’s departure. This will vest in tranches during 2014 and 2015, subject to normal performance conditions
LTIP awards made to him in 2012 and 2013 will subsist in full and will vest at the normal date subject to normal performance conditions

This arrangement ensures that any payment to Justin is aligned with the performance of the Company following his departure; a sign of his confidence in the new management and the business’s continuing prospects.

Mike Coupe will receive a salary of £900k as Chief Executive. The overall variable incentive opportunity for the Chief Executive role will remain unchanged. However, it will be rebalanced towards the long-term award (Future Builder LTIP award). The incentive opportunity will be limited to 110% of salary for each of the annual bonus and Deferred Share Award with vesting subject to achievement of performance targets. Mike will be granted a core LTIP award under the Future Builder of 62.5% of salary with potential vesting of 0-4x (ie up to 250% of salary for achievement of stretch objectives) subject to 3-year performance targets. The changes in incentive opportunity will only come into effect from the date of promotion and so will be pro-rated accordingly in 2014/15. He will receive a pension allowance of 30% of salary. Mike’s contractual terms have been aligned with current best practice.

Further details of the operation of the Deferred Share Award and LTIP are set out in the Directors’ Remuneration Report in our Annual Report and Accounts 2012/13. Full disclosure of these remuneration arrangements will be provided in our Directors’ Remuneration Report in our Annual Report and Accounts 2013/14.