Ocado shareholders have rebelled against high pay for directors at the online grocery specialist, with almost 30% voting against a plan to pay the chief executive, Tim Steiner, up to £100m over the next five years.
Just over 29% of voting shareholders rejected the company’s overall remuneration policy and almost a similar proportion voted against a three-year extension of Ocado’s “value creation plan”, under which Steiner can earn up to £20m a year and other executives up to £5m each.
The extension of the scheme to 2027 came after the company missed a share price target that would have triggered a £20m bonus for Steiner in March. Ocado’s share price has fallen by more than two-thirds to about 890p from a peak in January 2021, as the surge in online grocery shopping during the pandemic has rapidly unwound.
The scheme, which is linked to the performance of the share price, was announced in 2019 and was originally meant to run for five years until 2024. A significant proportion of the group’s shareholders tried to block the deal in 2020, when 30% voted against it, while about 13% voted against last year. The deal replaced an earlier high-paying plan that also proved controversial.
The latest pay proposals had been criticised by the investor advisers Glass Lewis and Institutional Shareholder Services, and had prompted complaints from Ocado’s shareholder Royal London Asset Management (RLAM).
RLAM said it had serious concerns about the value creation plan, adding that it was an “example of how poorly designed incentive plans” could “lead to excessive awards for management”.
In a statement released after the annual meeting, Ocado said it was nevertheless going ahead with the pay plan. It said the chair of its remuneration committee had undertaken an “extensive programme of engagement with our largest shareholders and representative bodies” in developing pay policy for the next three years.
“Many of our largest shareholders understood the strategic rationale for continuing to operate a non-standard, leveraged long-term incentive plan at Ocado and indicated their support for our proposals to extend the scheme beyond its original five-year term,” the company said, adding that investors had recognised the “challenges associated with recruiting internationally and competing for talent within the technology sector”.
