The chairman of J Sainsbury yesterday brushed aside concern over soaring directors' pay, declaring that annual rises in excess of inflation are now "simply a fact of corporate life".

At the annual meeting in London, Philip Hampton denied the supermarket giant is overpaying executives, stating that until last year chief executive Justin King only had pay increases in line with the rate of inflation.

Last month, it emerged that King is to reap the rewards of the failed private equity approach to the supermarket group by receiving a hefty pay rise and other adjustments to a pay packet that topped £2m last year.

King will receive a 17% rise in his basic salary of £725,000 - taking it to £850,000 - and a more generous award of shares than he would have received had a private equity consortium led by CVC not stalked the firm earlier this year.

Corporate governance consultancy Pirc recommended last week that shareholders oppose Sainsbury's remuneration report, and abstain on King's re-election over concerns about his contract. This advice was roundly ignored, with shareholders voting 98.7% in favour of the remuneration package.

Hampton said King's pay rise last year only took him "to the median" on the pay scale for such a job, pointing to the "excellent job" King has done in turning round the company.

Sainsbury is in the final year of a three-year recovery plan launched by King in 2004. In May, the retailing giant reported underlying profits up 42% to £380m and set out plans to grow sales at the business by £3.5bn within three years.

Sainsbury's shares rose late on Tuesday amid market talk of a bid and on speculation that property magnate Robert Tchenguiz was selling his stake. One source close to the situation said last month that Tchenguiz had doubled his stake to about 10%.

It also emerged in June that the Qatari royal family had raised its stake to 25%.

One shareholder demanded an explanation from Hampton about the implications of these developments, but was rebuffed. "I cannot say much about large holdings in the company," the chairman responded. "It's for them (the shareholders) to state what their attitudes are. The board's job is to run the business, not run the shareholders."

Tchenguiz had pressed Sainsbury's management to unlock value from its £8.6bn property portfolio. However, King reiterated at the meet- ing that controlling the property assets is critical to Sainsbury's future well-being, a policy which he said the "vast majority" of shareholders backed.

Sainsbury has a lower proportion of freehold properties than its Big Four competitors, Tesco, Asda and Wm Morrison.

Three weeks ago, the UK's third-largest supermarket chain posted a 5.1% rise in like-for-like sales excluding fuel for the 12 weeks to June 16, slightly below analysts' expectations.

Hampton said yesterday that competition remains "strong", adding that Sainsbury is "aware of the pressure on (customers) from rising interest rates".

Sainsbury yesterday made two new boardroom appointments. Mary Harris, a non-executive director of TNT and previously an executive at management consultants McKinsey and PepsiCo, becomes a non-executive director. Mike Coupe, Sainsbury's trading director, becomes an executive director.

The appointments take effect on August 1.