Sainsbury chief executive Justin King has blasted suppliers who are unwilling to help the chain ease its money troubles - at the same time as paving the way for a fat cat-style payment should he be axed from the top job.
In an unprecedented attack, King said suppliers had to “grasp the reality” of what was happening at the chain, with many of them “acting like there’s nothing wrong”.
King’s barbed comments come days after 100 suppliers rebelled against plans to extend their payments to 40 to 60 days after delivery (The Grocer, March 5, p8). “Last week we had our top suppliers together and there were a number of them giving us a hard time,” King told a Norwood Business Breakfast meeting this week. “I had to say that they had to grasp the reality of what was happening. Otherwise, we will all go down together. Yet, still many of our suppliers are acting like there is nothing wrong.”
King also said he saw nothing wrong with large pay-offs to failed chief executives and added: “Contracts are there to protect the company and I see nothing wrong with the company honouring the contract in the other way. I have no problem with reward for success but I also have no problem with contracts being
honoured.” King’s comments are likely to anger suppliers on both sides of the Sainsbury debate.
A leading figure at one manufacturer holding out against extended payment terms said: “This is a bit rich. On the one hand he’s asking us to pay for the mess that the chain is in. On the other, he’s openly sanctioning a nice pay off for himself when it all goes wrong.”
Another supplier, which has already agreed to being paid later than previously, said: “These comments would appear to be particularly unhelpful, particularly at a time when so many of us have bent over backwards to help Sainsbury’s get back on its feet.”
Meanwhile, Sainsbury is sounding out institutional investors over a new incentive scheme that could pay £90m to the chain’s top 1,100 managers if it meets financial targets.
The scheme, which could net King £5m in bonuses, will not be open to managers in its convenience division.
Simon Mowbray
In an unprecedented attack, King said suppliers had to “grasp the reality” of what was happening at the chain, with many of them “acting like there’s nothing wrong”.
King’s barbed comments come days after 100 suppliers rebelled against plans to extend their payments to 40 to 60 days after delivery (The Grocer, March 5, p8). “Last week we had our top suppliers together and there were a number of them giving us a hard time,” King told a Norwood Business Breakfast meeting this week. “I had to say that they had to grasp the reality of what was happening. Otherwise, we will all go down together. Yet, still many of our suppliers are acting like there is nothing wrong.”
King also said he saw nothing wrong with large pay-offs to failed chief executives and added: “Contracts are there to protect the company and I see nothing wrong with the company honouring the contract in the other way. I have no problem with reward for success but I also have no problem with contracts being
honoured.” King’s comments are likely to anger suppliers on both sides of the Sainsbury debate.
A leading figure at one manufacturer holding out against extended payment terms said: “This is a bit rich. On the one hand he’s asking us to pay for the mess that the chain is in. On the other, he’s openly sanctioning a nice pay off for himself when it all goes wrong.”
Another supplier, which has already agreed to being paid later than previously, said: “These comments would appear to be particularly unhelpful, particularly at a time when so many of us have bent over backwards to help Sainsbury’s get back on its feet.”
Meanwhile, Sainsbury is sounding out institutional investors over a new incentive scheme that could pay £90m to the chain’s top 1,100 managers if it meets financial targets.
The scheme, which could net King £5m in bonuses, will not be open to managers in its convenience division.
Simon Mowbray
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