The executive who sold Focus DIY for £1 last year is on his way to becoming a £9 million man after landing the top job at Woolworths.

Steve Johnson will join Woolworths as its chief executive on September 1 after the appointment was announced by the beleaguered high street chain yesterday. Mr Johnson will earn a total of £9 million over the next four years if he can almost triple the share price to 20p — an achievement that would trigger a £4.8 million bonus. He also stands to earn £2.2 million in annual bonuses between now and 2012 on top of a £550,000 annual salary.

Richard North, the chairman of Woolworths, defended the size of the pay packet and insisted that Mr Johnson was the ideal candidate. He said: “We have a company that is hugely challenged on the operational side. If he delivers, he will have earned every penny of it.”

Mr Johnson replaces Trevor Bish-Jones, who departed in June after six years with the business. Mr North said that Mr Johnson had far greater marketing and strategical skills. “I wouldn’t be replacing Trevor if I felt he had them,” he said.

Mr North added that the minority shareholders Baugur and Ardeshir Naghshineh, the Iranian-born property tycoon who has a 10.2 per cent stake, had been consulted on the move. Analysts were less enthusiastic and shares in Woolworths fell by nearly 3 per cent to 7.15p. Sanjay Vidyarthi, a Dresdner Kleinwort analyst, said: “It’s hard to understand what Steve Johnson can do that Trevor hasn’t already been doing.”

Others raised fears that Tony Page, managing director for commercial and marketing at Woolworths, may leave the business after being passed over. He was seen as the best-placed internal candidate for the chief executive job. Greg Lawless, a Blue Oar Securities analyst, said: “If I was running Sainsbury’s I’d bring Tony Page in tomorrow to head up non-food.”

Mr Johnson has been out of work for a year since masterminding the sale of Focus DIY to Cerberus, the private equity company, for £1 last year. As part of the deal, Cerberus agreed to pay off Focus DIY’s £174 million debts and pay £40 million to bondholders.

Mr Johnson joined Focus DIY as chief executive in 2003, when it was owned by Duke Street Capital and Apax. He spent seven years at Asda between 1993 and 2000. Archie Norman, the former Asda chief executive, said: “He’s super bright, totally unflappable and won’t be fazed by this challenge at all.”

Woolworths may barely break even this year after a bleak profit warning last month. It has been squeezed out by fierce competition from supermarkets and the success of rival discount retailers such as Wilkinsons.

Mr Johnson said: “I will be focused on value creation for all stakeholders as we seek to move the group forward.”

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