Ocado is facing criticism as it seeks shareholder approval on Monday for a potential bonus worth up to £14.8m for its chief executive, Tim Steiner.
Glass Lewis, an influential shareholder advisory group, has urged investors to vote against the online grocery group’s remuneration policy and performance share plan at its annual shareholder meeting, flagging “egregious remuneration practices”.
Glass Lewis said “we remain concerned about the potential for excessive remuneration” and “question the need for this enhanced incentivisation tool”.
Dan Howard from the campaign group ShareAction, which heads up the Good Work coalition representing $6.6tn in assets under management, said he planned to ask Ocado’s board why it was comfortable proposing the multimillion-pound pay package for Steiner while “refusing to pay hundreds of its workers a real living wage of £12 an hour”.
He urged the company to become accredited to the independently verified Living Wage Foundation scheme which each year calculates the minimum hourly earnings required to cover the cost of living. Those who sign up must pay all employees and third-party contractors at least the minimum rate.
“Ocado has been talking about addressing low pay for five years but has yet to make a long-term commitment. 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,” Howard said.
He said Ocado’s pay policy meant it was lagging behind industry peers such as Tesco, Sainsbury’s and Marks & Spencer, all of which have committed to pay their staff at least the real living wage.
The online grocery tech group wants to launch a scheme under which Steiner could receive a bonus worth up to 1,800% – or an “enhanced multiplier” – of his £824,570 base salary if its share price hits £29.69 in three years’ time and other performance targets are met. Ocado shares hit £29 during the pandemic when online shopping surged, but have since fallen, closing at 353p on Friday.
He would receive an award worth 600% of his base salary, or almost £5m, if targets for total shareholder returns and other performance measures are met but the share price goal is missed.
Ocado is no stranger to battles with shareholders over high pay. The latest scheme is intended to replace an earlier long-term bonus plan known as the “value creation plan” (VCP) which is expiring in 2027.
Ocado said it wanted to replace that scheme because “unprecedented volatility” in its share price had “served to undermine the impact of the VCP scheme to the extent that it is no longer motivating or retentive to many of its participants.”
In 2022, Ocado shareholders rebelled against high pay for directors at the online grocery specialist, with almost 30% voting against a plan to pay Steiner up to £100m over the following five years.
Despite the protest vote, Ocado went ahead with a three-year extension to the VCP, under which Steiner could earn up to £20m a year and other executives up to £5m each.
Ocado declined to comment but in its annual report, the chair of the remuneration committee, Julie Southern, said: “My belief, and that of the committee, is that these new proposals preserve a focus on the level of ambition which is so important to Ocado, while continuing to ensure our remuneration structures align the interests of our senior management team directly with those of our shareholders.
“They offer substantial comparative reward for transformational performance while migrating to a structure that will be more motivating and retentive for executives, better suited to attracting senior new hires, and acceptable to a wider group of our shareholders.”
