Morrisons' new chief in line for £6.1m package

The Bradford-based supermarket said Mr Philips, who joined from

Canadian grocer Loblaw, will take home a basic salary of 800,000. That is slightly below the 850,000 paid to former chief executive Marc Bolland, who defected late last year to join Marks & Spencer.

The retailer also revealed it has been underpaying its executives for more than a year, so has increased bonuses and incentives to ensure it retains key staff.

"The committee considers that this is critical to the group's future success and the recruitment and retention of key individuals," said Paul Manduca, chair of Morrisons' remuneration committee.

Mr Philips, who started at the end of March, has also been awarded share incentives worth up to 2.2m based on earnings per share and like-for-like non-food sales growth.

This year Morrisons has doubled the maximum bonus for executives to 200 per cent of salary, meaning Mr Philips could earn a bonus of up to 1.6m. However, half of his bonus will be deferred into shares for three years.

He was also given shares worth 940,000 to replace awards he would have received at Loblaw, plus a 356,000 tranche of shares vesting in March 2012. Mr Phillips will also receive a 200,000 pension supplement.

Morrisons' remuneration committee insisted it has not paid over the odds for Mr Philips.

"The package agreed with Mr Philips is appropriate and that the company is not paying any more than was necessary to facilitate his recruitment," it said. It added the bigger bonus potential is based on more stringent targets.

"The remuneration committee considers that the targets... are more demanding compared to those set out in 2009," said Morrisons.

The retailer also revealed it doubled the salaries of finance director Richard Pennycook and retail director Mark Gunter last year on learning of Mr Bolland's departure. They were each awarded a one-off 540,750 boost to ensure their loyalty, amid fears Mr Pennycook might jump ship after being overlooked for the chief executive role.

"Following Marc Bolland's resignation, the remuneration committee considered it was responsible and commercially appropriate to secure the services of Richard Pennycook and Mark Gunter," said Morrisons.

The supermarket also confirmed Mr Bolland received no bonus or payoff on his departure for M&S. There, he was given a "golden hello" of up to 15m, including 7.5m in cash and shares as compensation for benefits he forewent on leaving the Yorkshire retailer.