Unlock Editor’s Digest for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Ocado has suffered a shareholder revolt over a new remuneration system that includes a bonus share award of up to £15 million for co-founder and CEO Tim Steiner.
Just over 19 per cent of votes cast at the grocer’s annual meeting on Monday rejected a new pay scheme that will reward Steiner if Ocado’s share price reaches £29.69 in three years and which, among other things, improves its cash flow. Ocado shares are currently trading for less than £4, down more than 50 per cent since the start of the year.
The share award is worth around £14.8 million – or up to 1,800 percent of Steiner’s base salary of £824,570.
This month, two advisory groups urged shareholders to vote against the company’s proposed policies, raising concerns that the changes would lead to “excessive wages” and “[award] significantly above market norms”.
Steiner, who earned almost £2m last year, founded the company with two other Goldman Sachs executives during the dot-com bubble of the 2000s. In 2019 he was paid £59m, even though Ocado suffered a loss of £215m , which represented one of the highest annual payouts for a FTSE 100 boss.
Rewarding Ocado executives when the company lost almost a billion pounds in the last two years “makes you wonder” what executives would actually be paid “should the company ever make a profit,” said Clive Black, an analyst at Shore Capital.
Chairman Rick Haythornthwaite said the board viewed payments to individuals as “fair”.
“I would just like to point out that he is our CEO and founder, who started this company 21 years ago with a blank piece of paper. “None of these people would have a job without this person’s performance during this period,” he said in response to a question at the annual general meeting about the huge pay differences 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, surged during the pandemic and hit an all-time high in 2020 after a series of deals to supply its robot technology to retailers the whole world.
However, since then the retailer has become one of the most shorted stocks on the London market, while its market value has fallen to less than £3bn, compared to a peak of £21.6bn four years ago.
The group reported an annual pre-tax loss of £394m on sales of £2.7bn last year.
Ocado said in February it had lost about 200,000 active customers during the pandemic as it struggled to cope with demand. However, the company still managed to grow faster than the UK’s largest supermarkets in the first quarter of this year, according to market research firm Kantar. Sales rose 12.5 percent year-on-year in the twelve weeks to April 14, exceeding the online market’s overall growth of 6.8 percent.