Ocado faces shareholder revolt over £88m bonus payout
Ocado is to face a shareholder rebellion over its “excessive” executive pay after four bosses banked an £88m bonus payout.
The chief executive, Tim Steiner, was the biggest winner from the scheme, raking in £54m – one of the largest bonus payouts made by a listed UK company.
The chief financial officer, Duncan Tatton-Brown, and chief operating officer, Mark Richardson, each banked £14m. Luke Jensen, who runs its tech business, Ocado Solutions, received £6m.
Royal London Asset Management (RLAM), which owns a 0.3% stake in Ocado, said it would vote against the pay report at the annual shareholder meeting.
The influential proxy voting agencies, which advise big shareholders how to vote, have raised a red flag over the executive pay scheme before Wednesday’s meeting behind closed doors at its head office in Hatfield, Hertfordshire.
Shareholders, who cannot physically attend due to lockdown restrictions, are voting by proxy, with at least 25% expected to protest against the payouts. The company attracted a similar-sized rebellion last year.
RLAM said this year’s bonus bonanza was “a classic example of how poorly designed incentive plans can lead to excessive awards for management”. Ashley Hamilton Claxton, its head of responsible investment, complained payouts were not capped and the remuneration committee “did not apply any discretion”.
The men were promised the shares in 2014 under a five-year “growth incentive plan” that measured Ocado’s share price growth relative to the FTSE 100.
The company’s value has soared over the past two years: the shares, which were changing hands for about 250p in November 2017, are now worth £17 after Steiner sold its grocery-picking expertise to seven foreign supermarket chains.
The advisory groups Pirc, Glass Lewis and Institutional Shareholder Services have told investors to vote against the company’s pay report. They have also urged investors to block the re-election of Andrew Harrison who is head of the remuneration committee.
The lockdown has resulted in a period of record grocery sales as the closure of restaurants, cafes and pubs forces Britons to eat and drink at home. But while supermarkets have expanded online services after a surge in demand for home delivery, Ocado’s automated warehouses quickly reached capacity, forcing the retailer to turn away custom.
The Shore Black analyst Clive Black said Ocado had suffered a “meltdown” in the early weeks of the crisis, with both the app and website crashing.
“I don’t think Ocado has had a good campaign,” he said. “It has taken 23 years to get from zero to 7% of grocery sales online – and it has taken 23 days to get to 10%. Ocado will benefit from that but others will benefit more.”
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