Sainsbury’s bosses exercise share options worth £4.5m
Timing and size of sale could raise eyebrows after Asda merger was announced
Perhaps Mike Coupe’s now famous rendition of “We’re in the Money” was a prediction, rather than a reaction. Four days after announcing a proposed takeover of Asda that sent the group’s stock price soaring, the Sainsbury’s chief executive and colleagues exercised option awards over £4.5m worth of shares.
The transactions were announced in a statement on May 8. The nil-cost options were granted in 2014 and 2015 under a long-term incentive plan, and in May 2016 as a deferred share award. The LTIP shares can only be sold after three and four years.
Mr Coupe exercised a total of 608,700 options and sold £864,000 worth of the shares to satisfy the tax and national insurance due upon encashment of the options. He retains a total of 1.6m shares in Sainsbury’s, worth about £4.7m at the closing price of 295p on May 8. A week earlier, they would have been worth closer to £4.3m.
John Rogers, the chief executive of Argos, exercised options over more than 350,000 shares, selling 271,000 of them and retaining a total holding of 937,636.
The company played down suggestions of a vast payday. “Mike is not selling any shares for cash and is not making any immediate profit,” the company said. “He is selling a portion of shares to meet tax and national insurance obligations. This is standard practice and happens in May every year, immediately after the publication of our preliminary results.”
It has also said that the transaction with Asda should not result in the closure of any stores or the loss of any jobs, though many politicians and union leaders fear this pledge will not be honoured.
However, the timing and the size of the sale is likely to raise eyebrows. The equivalent disposal in 2017 was far smaller; Mr Coupe exercised 182,814 options and sold 86,095. This is partly because it did not include any element from the long-term incentive plan, only the deferred share awards which recognise short-term performance on financial and non-financial metrics. The long-term plan targets relate mostly to return on capital and cash flow. Additionally, Mr Coupe received no cash bonus last year because Sainsbury’s failed to hit agreed profit targets.
Just under three-quarters of Sainsbury’s shareholders approved a new pay policy at last June’s annual meeting, that will mean LTIP shares not normally being released until five years after their grant.
Mr Coupe was paid a total of £2.35m for the year to March 2017, compared with £4.15m for Dave Lewis, his counterpart at Tesco and £2.79m for David Potts, the chief executive of Morrison. Justin King, his predecessor at Sainsbury’s, earned £3.95m in the year to March 2014, his last at the company.