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Ocado has suffered a shareholder revolt over a new pay plan that includes a stock bonus of up to £15m 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 plan that will reward Steiner if Ocado’s share price reaches £29.69 within three years and it improves its cash flow, among other metrics. Ocado shares are currently trading at less than £4, a drop of 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 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 “overpayments” and “[award] materially above market norms.”
Steiner, who was paid almost £2m last year, co-founded the company with two other Goldman Sachs executives during the dotcom bubble of the 2000s. In 2019, he received £59m, despite that Ocado suffered a £215m loss, in one of the largest annual payouts for a FTSE 100 chief executive.
Rewarding Ocado executives when the company had lost almost £1bn in the past two years “makes you wonder” how much the executives would actually be paid “if it ever turned a profit”, said Shore analyst Clive Black. Capital.
Chairman Rick Haythornthwaite said the board considered the payments to individuals “fair.”
“I would just point out that he is our CEO and founder, who started this company 21 years ago with a blank sheet of paper. None of these people would have a job without that person’s performance during that period,” he said at the AGM in response to a question about the large pay disparity between Steiner and other employees.
Shares in the company, which sells its robotic warehouses to other grocery stores around the world and co-owns an online supermarket with Marks and Spencer, soared during the pandemic and hit an all-time high in 2020 thanks to a series of deals to supply its technology to retailers around the world.
However, the retailer has since become one of the most shorted stocks on the London market, while its market value has plummeted to less than £3bn compared to a high of £21 .6 billion 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 around 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 largest supermarkets in the first quarter of this year, according to research firm Kantar, with sales rising 12.5 per cent in the 12 weeks to April 14 compared to from the previous year, ahead of the total online market growth of 6.8 percent. percent.