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Last Updated: Sunday, 19 September, 2004, 08:38 GMT 09:38 UK
Sainsbury's pays 2.6m to Davis
Sir Peter Davis
Sir Peter's bonus sparked anger from shareholders
The ousted ex-chairman of J Sainsbury, Sir Peter Davis, is to receive a controversial 2.6m ($4.67m) cash payout from the supermarket giant.

Sir Peter left the company in July and had been locked in a legal battle with Sainsbury's over the revised terms of his salary and payoff.

Now, on top of the cash deal, he will get 0.5m a year until July 2005, when his fixed term contract was to run out.

This has been reduced from his original salary of 850,000 a year.

Sainsbury's said the 2.6m was a "significant reduction" of about 1m from what Sir Peter had originally been entitled to.

Shareholder revolt

Sir Peter came under pressure to quit the company after the UK's third-largest supermarket retailer lost market share and suffered a fall in earnings.

A shareholder revolt in July forced the board to withdraw its original payoff deal.

The supermarket chain says it hoped the new settlement would draw a line under the affair.

"Sainsbury's believes it is in the best interests of the company's shareholders to reach settlement and bring this matter to a conclusion," the grocery firm said in a statement.

Sainsbury also announced that Keith Butler-Wheelhouse, head of its remuneration committee, had resigned along with fellow non-executive director Lord Levene.

New chairman Philip Hampton is said to be keen to begin a clearout of non-executive directors responsible for signing off Sir Peter's original deal, valued at almost 4m.

Meanwhile, Sir Peter said he plans to retire from corporate life and has no intention of taking on another job at a public company.

"I am retiring and want to enjoy life out of the public eye," he said.

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