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Ocado has suffered a shareholder revolt over a new pay scheme that includes a bonus share award of up to £15mn for co-founder and chief executive Tim Steiner.
Just over 19 per cent of votes cast at the grocer’s annual meeting on Monday opposed a new pay scheme that will reward Steiner if Ocado’s share price reaches £29.69 in three years’ time and it improves its cash flow, among other metrics. Ocado shares currently trade at less than £4, down more than 50 per cent since the start of the year.
The share award is worth about £14.8mn — or as much as 1,800 per cent of Steiner’s £824,570 base salary.
This month two advisory groups urged shareholders to vote against the company’s proposed policy, raising concerns that the changes could lead to “excessive pay” and “[award] materially above market norms”.
Steiner, who was paid almost £2mn last year, co-founded the company with two other Goldman Sachs executives during the dotcom bubble of the 2000s. In 2019 he was paid £59mn, despite Ocado suffering a £215mn loss, in one of the largest annual payouts for a FTSE 100 chief executive.
Rewarding Ocado executives when the business had lost nearly £1bn over the two last years, “makes one wonder” what executives actually would pay themselves “should it ever make profit”, said Clive Black, analyst at Shore Capital.
Chair Rick Haythornthwaite said the board regarded the payments to individuals as “fair”.
“I would simply point out he is our chief executive and founder who started this company 21 years ago with a blank sheet of paper. None of these people would have a job without the performance of that individual during that period,” he said at the AGM in response to a question about the vast disparity in pay between Steiner and other employees.
Shares in the company, which sells its robotic warehouses to other grocers worldwide and co-owns an online supermarket with Marks and Spencer, soared during the pandemic and hit an all-time high in 2020 at the back of a series of deals to supply its technology to retailers around the world.
However, since then the retailer has become one of the most shorted stocks on the London market while its market value has plummeted to less than £3bn compared with a peak of £21.6bn four years ago.
The group reported an annual pre-tax loss of £394mn on sales of £2.7bn last year.
Ocado in February said it had lost about 200,000 active customers during the pandemic as it struggled to cope with demand. But it still managed to grow faster than the UK’s biggest supermarkets in the first quarter this year according to research firm Kantar, with sales rising 12.5 per cent in the 12 weeks to April 14 from a year ago, ahead of total online market growth of 6.8 per cent.
