Sainsbury's, the UK supermarket group, has handed new boss Mr Justin King free shares worth £1.4 million (€2.1 million) - just as staff discovered their Christmas bonus was being scrapped.

The supermarket chain confirmed it won't be offering staff a £100 goodwill payment in December for the first time in 25 years, as it focuses investment on a trading revival. This will affect 100,000 staff who have instead been offered a 5 per cent increase in store discount to 15 per cent from October to December.

Details emerged as Sainsbury's said it was giving Mr King, who joined as chief executive from Marks & Spencer two months ago, nearly 500,000 free shares exercisable from 2007.