Woolworths says it is 'crucial' to retain Mr Bish-Jones

He will now get up a cash bonus worth 120% of his �480,000 ($852,000) salary if he drives profits "significantly higher" than current expectations.

He will have other targets including sales and stock levels.

A share plan could also see him collect �1.5m in 2008, if Woolworths performs well against rival retailers.

The measures should deter other companies from trying to lure Mr Bish-Jones from his current post, Woolworths hopes.

"The board believes that Trevor Bish-Jones' current package does not adequately reflect his value to the group," the company said in a statement.

'Highly regarded'

Same-store sales at Woolworth's core chain were 4.4% lower in the 24 weeks to 16 July.

But company chairman Gerald Corbett said: "Trevor Bish-Jones is a highly regarded retailer and a valuable asset to the business.

"We feel that it is crucial to retain him and other executives who continue to lead the group through challenging trading conditions."

The company also said Mr Bish-Jones' "skills and expertise for the benefit of the group in today's retail environment is particularly important".

The deal has been sanctioned by major shareholders in the firm.

Mr Bish-Jones is a former managing director of electrical retailer Currys and was appointed as chief executive in 2002 when Woolworths demerged from Kingfisher.