Sir Peter's share bonus triggered the row

The firm avoided an embarrassing defeat at its annual general meeting after the Sainsbury family, which owns 38% of the firm, opted to back the board.

Sainsbury's decision to withdraw a £2.3m bonus for former chairman Sir Peter Davis helped it to win the vote.

But about 30% of shareholders voted against the pay report, with one investor calling the affair a "fiasco".

Investors called on the group's board to apologise over the bonus award, saying the situation had "damaged the company deeply".

Another demanded that Sainsbury's reveal what steps it planned to take to avoid a repeat of the problem.

Investor fury

Last week, the UK's fourth-biggest supermarket chain said it had abandoned plans to make the multi-million payout to Sir Peter, who was forced out on 1 July.

The decision came about in the wake of fresh information about the state of the company, which emerged in an analysis by new chief executive Justin King.

Cancel the disgraceful bonuses paid for failure, make bonuses payable for success Sainsbury investor Check Sainsbury's share price

Investors had been furious that Sir Peter stood to get 864,000 shares, despite the supermarket suffering from falling profits and a shrinking market share.

However, despite deciding to withdraw the award for Sir Peter, Sainsbury still put the original remuneration report up for approval at the meeting.

Amid calls of "shame, shame" the head of Sainsbury's remuneration committee, Keith Butler-Wheelhouse, came in for a particularly vitriolic attack from small shareholders who were still seething over his role in helping devise the bonus for Sir Peter.

But Mr Butler-Wheelhouse refused to apologise when asked to do so by one disgruntled shareholder for overseeing what she labelled the "damaging fiasco".

Another investor also berated the board on the issue, saying: "Cancel the disgraceful bonuses paid for failure, make bonuses payable for success."

Family backing

Meanwhile, AGM chairman Lord Levene said he was not surprised that shareholders had been confused by developments.

Our customers say that we have not been looking after them as well as we should have done Justin King, Sainsbury's chief

But he said the Sainsbury family believed it was in the interests of the company and its shareholders to approve the remuneration report "given that it has no implications for Sir Peter Davis".

Sainsbury revealed that just over 784 million of 1.11 billion proxy votes cast were in favour of the resolution with just 336 million voting against - which will ensure the resolution is passed.

A final result tallying votes by smaller investors will be announced later.

Mr King said that the vote showed most shareholders believe "now is the time to move on".

But the wage issue could still raise its head as the company is currently in discussions with lawyers about withdrawing Sir Peter's bonus.

Earlier, the new chief executive had told investors that the company believed its disappointing recent performance had let down investors .

He added that the firm had become "inward looking" and had lost focus on its customers.

"Our customers say that we have not been looking after them as well as we should have done," he said.