Home » UK Business News » Ocado ShareHolders Hit Back At £14.8m Bonus For Chief Executive

Ocado ShareHolders Hit Back At £14.8m Bonus For Chief Executive

By Hugh Fort in UK Business News, posted April 29, 2024

Ocado is bracing itself for criticism from its shareholders over a proposed bonus package for CEO Tim Steiner that could total £14.8m.

Retail Gazette reported shareholder advisory firm Glass Lewis has urged investors to reject what it calls the company’s “egregious remuneration practices” during the annual general meeting.

The firm said: "We remain concerned about the potential for excessive remuneration" and questioned "the need for this enhanced incentivisation tool."

Dan Howard from the ShareAction campaign group also plans to challenge Ocado’s board on its decision.

He questioned how the company can offer such a substantial pay package to Steiner while "refusing to pay hundreds of its workers a real living wage of £12 an hour."

Howard also pushed for Ocado to join the Living Wage Foundation scheme, which mandates its members to pay a minimum hourly rate that reflects the cost of living.

He said: "Ocado has been talking about addressing low pay for five years but has yet to make a long-term commitment."

He added: "Today we’re calling on the board to pay the real Living Wage – this would make a significant difference to the lives of hundreds of its lowest-paid workers."

Scheme proposed by Ocado gives boss up to 1,800 percent of £824,570 base salary

Ocado is reportedly falling behind on wage standards compared to peers like Tesco, Sainsbury’s, and M&S, which have all committed to the real living wage.

Institutional Shareholder Services, another investor group, voiced "material concerns" last month about Ocado’s remuneration plan.

It highlighted proposed sum was "materially above market norms" and did not align with "UK market standards and investor expectations."

The controversy surrounds a new incentive scheme proposed by Ocado that would grant Steiner up to 1,800 percent of his £824,570 base salary—approximately £14.8m—if Ocado’s share price hits £29.69.

It is also dependent on other performance targets being achieved within the next three years.

Currently, Ocado’s shares trade at just under £3.60.

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If only the performance and total shareholder return targets are met, excluding the share price goal, Steiner would still stand to receive 600 percent of his base salary, equivalent to around £5m.

The company's board acknowledged Steiner's pivotal role in its recent annual report.

It said he has a "unique position as a founder and his long-term focus and strategic vision."

Julie Southern, chair of the remuneration committee, defended the proposed scheme, stating it would: "Offer substantial comparative reward for transformational performance while migrating to a structure that will be more motivating and retentive for executives."

At last year’s AGM, nearly a third of the votes were cast against Ocado’s previous bonus proposal, which would have awarded Steiner £100m over five years if specific share price targets were achieved.

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