'Mon-ey,' sang Pink Floyd. 'It's a gas. Grab that cash with both hands and make a stash.' Perhaps Sir Peter Davis is a fan. Either way, he has just walked away from the chairmanship of J Sainsbury with more money than I could ever hope to earn in my lifetime.
Sainsbury’s has been on a slippery slope for months. On my last shopping trip there, basic items were unavailable and the check-out register broke down – just when I’d unpacked everything.
This was the same morning that Sir Peter’s pay-off was spread all over the newspapers. He receives £2.6m in cash and will have his salary of £500,000 paid until next summer unless he gets another job first. There is a £500,000 uplift in his pension fund, plus life assurance and options over a few million shares.
Well, he does have a yacht on the Cote d’Azur to maintain. And those things eat money. But the interesting side to the pay-off was what went on behind the scenes.
The award to Sir Peter was accompanied by the resignation of two non-executive directors: Lord Levene of Portsoken and Keith Butler-Wheelhouse. Lord Levene issued a statement saying he had quit in protest at the payment to Sainsbury’s former chairman. It is understood that he wanted the company to contest Sir Peter’s award in the courts, forcing the great man to explain why he felt entitled to the money. But Sainsbury’s wimped out.
Lord Levene has a point. Faced with the prospect of a public grilling, senior executives might think twice about these huge pay-offs. Think of Lord Simpson of Dunkeld, who quit Marconi with £1.5m. Or Sir Phil Watts at Shell, who banked £1.1m.
Why are ‘rewards for failure’ tolerated? In a word: apathy.
Jon Ashworth is business features editor at The Times.