“Ceos who step down too early or too late have a negative effect on company performance after they leave,” said Professor Andre Spicer of Cass Business School. But his departure will create some uncertainty among investors, reflected in the wobbly share price.
“It might also create a sense of loss among some employees,” said Spicer. “Given King has been in post for some time, he may cast a shadow over his successor. Mike Coupe faces a tough challenge of navigating between trying to live up to King's legacy or trying to create a break. Either task is going to be tough.”
Spicer thought it significant that the Sainsbury boss had decline any prospect of golden financial goodbye. “King's decision to shun various post position perks shows a new sensitivity among senior leaders to the image of greedy fat cat bosses. It signals recognition that excessive executive perks have soured many members of the public, who also shop in his company’s stores and own company shares.”
‘Greedy fat cat bosses’
City analyst Shore Capital also judged the timing of King’s departure wise. “Mr King’s timing is sound, as his successor may yet have to deal with a rejuvenating Tesco,” said analysts Clive Black and Darren Shirley. They added King “was blessed with the market leader [Tesco] being somewhat distinctly and sustainably off form through the latter stages of his tenure.”
The analysts and Spicer praised the appointment of Mike Coupe, currently group commercial director, as his successor. Black and Shirley praised Coupe’s long experience of the British grocery market, having worked at Asda and Iceland before joining King at Sainsbury in 2004. “We believe that Mr Coupe has been very effective in his commercial role, proving to be astute to the market conditions and extolling the virtues of Sainsbury’s offer in challenging times to its customers,” they said.
Spicer added:“It might not give some analysts the scent of fresh blood they might hope for, but it will mean he has a detailed knowledge of internal problems and opportunities within the firm.
“Too often outside appointments boost share prices in the short term, but implement generic strategies which do not fit their new company, damaging performance in the long term.”
‘Crying out for more’
Meanwhile, King told BBC News: “One of the marks of any period of leadership is if the leader chooses to go at a time when people are still … crying out for more. And, I like to think that is the position I find myself in.”
King added that he retained significant shares and incentives in the retailer and wanted to see it succeed after he leaves.
He has dismissed suggestions he might be about to accept the leadership of Formula One racing. “I’m not ruling anything out or anything in. I’m still a relatively young man and I have plenty in the tank yet.”
Read how King broke the news of his departure here.
King – in his own words
- “I’ve been in the business for 10 years – they’ve been 10 great years. One of my ambitions is that the business goes from strength to strength after I have left and we have fantastic internal succession in Mike Coupe.” January 2014.
- “This quarter [14 weeks to January 4 2014] has been characterised by a very tough sales environment throughout October and November, with customers saving up to treat their families over the Christmas period. However, we saw strong sales in the key period over Christmas, helping record numbers of customers to ‘live well for less’. Like-for-like sales, excluding fuel of 0.2%, coupled with a strong contribution from new space, led to our best Christmas ever.” January 2014.
- “We are number two [after Tesco in the ranking of UK supermarkets] by some measure but the most important measure is what our customers think. On pretty much every customer measure, we are leading the supermarket pack.” November 2013.
- “Our online grocery businesses have continued to perform well across the group, and we are now offering the services in over 50 cities across nine markets outside the UK.” October 2013.
- “The agr-food sector is one of the most important industries in the UK, which is why it is important to plan for the future now. Attracting young talent and new technologies will ensure we continue to provide quality food to the high standards that customers rightly expect. I am delighted to co-chair this task force [Food Economy Taskforce], which will help to address this challenge.” July 2013.
- “Own-label keeps brand honest in terms of the pricing they try to achieve and the quality they trade at.” July 2012.