[UK] Ocado provokes criticism with £14.8m bonus package for top boss

British online supermarket Ocado provoked criticism at the end of last month as it sought shareholder approval for a potential bonus worth up to £14.8m for CEO Tim Steiner, The Guardian reports.

Shareholder advisory group Glass Lewis urged investors to vote against the grocery group’s remuneration policy and performance share plan at its annual shareholder meeting, highlighting “egregious remuneration practices”.

Glass Lewis reportedly said “We remain concerned about the potential for excessive remuneration” and “question the need for this enhanced incentivisation tool”.

Dan Howard from ShareAction - the campaign group which heads up the Good Work coalition representing $6.6tn in assets under management - said he intended to ask Ocado’s board why it was comfortable proposing the multimillion-pound pay package for Mr Steiner at a time when it is “refusing to pay hundreds of its workers a real living wage of £12 an hour”.

Mr Howard reportedly urged Ocado to become accredited to the Living Wage Foundation scheme. Each year the Foundation calculates the minimum hourly earnings required to cover the cost of living. Employers signed up to the scheme 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,” Mr Howard said.

He added that Ocado’s pay policy had led to it falling behind industry peers such as Tesco, Sainsbury’s and Marks & Spencer; retailers that have committed to pay their staff at least the real living wage.

Ocado reportedly wants to launch a scheme that could allow Mr  Steiner to receive a bonus worth up to 1,800 per cent - an “enhanced multiplier” -  of his £824,570 base salary if its share price hits £29.69 in three years and other performance targets are met.

 Ocado shares reached £29 during the pandemic as online shopping exploded but their value has fallen in more recent times, closing at 353p on Friday.

He would receive an award worth 600 per cent of his base salary (or almost £5 million) if targets for total shareholder returns and other performance measures are met but the share price goal is missed.

In 2022, Ocado shareholders rejected high pay for directors when almost 30 per cent voted against a plan to pay Mr Steiner up to £100m over the following five years.

Despite the protest vote, Ocado reportedly proceeded with a three-year extension to the VCP, under which the CEO could earn up to £20m a year and other executives up to £5m each.

Ocado declined to comment on the situation, however, in its annual report Julie Southern - the chair of the remuneration committee - 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.”

Source: The Guardian

(Quotes via original reporting)

British online supermarket Ocado provoked criticism at the end of last month as it sought shareholder approval for a potential bonus worth up to £14.8m for CEO Tim Steiner, The Guardian reports.

Shareholder advisory group Glass Lewis urged investors to vote against the grocery group’s remuneration policy and performance share plan at its annual shareholder meeting, highlighting “egregious remuneration practices”.

Glass Lewis reportedly said “We remain concerned about the potential for excessive remuneration” and “question the need for this enhanced incentivisation tool”.

Dan Howard from ShareAction - the campaign group which heads up the Good Work coalition representing $6.6tn in assets under management - said he intended to ask Ocado’s board why it was comfortable proposing the multimillion-pound pay package for Mr Steiner at a time when it is “refusing to pay hundreds of its workers a real living wage of £12 an hour”.

Mr Howard reportedly urged Ocado to become accredited to the Living Wage Foundation scheme. Each year the Foundation calculates the minimum hourly earnings required to cover the cost of living. Employers signed up to the scheme 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,” Mr Howard said.

He added that Ocado’s pay policy had led to it falling behind industry peers such as Tesco, Sainsbury’s and Marks & Spencer; retailers that have committed to pay their staff at least the real living wage.

Ocado reportedly wants to launch a scheme that could allow Mr  Steiner to receive a bonus worth up to 1,800 per cent - an “enhanced multiplier” -  of his £824,570 base salary if its share price hits £29.69 in three years and other performance targets are met.

 Ocado shares reached £29 during the pandemic as online shopping exploded but their value has fallen in more recent times, closing at 353p on Friday.

He would receive an award worth 600 per cent of his base salary (or almost £5 million) if targets for total shareholder returns and other performance measures are met but the share price goal is missed.

In 2022, Ocado shareholders rejected high pay for directors when almost 30 per cent voted against a plan to pay Mr Steiner up to £100m over the following five years.

Despite the protest vote, Ocado reportedly proceeded with a three-year extension to the VCP, under which the CEO could earn up to £20m a year and other executives up to £5m each.

Ocado declined to comment on the situation, however, in its annual report Julie Southern - the chair of the remuneration committee - 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.”

Source: The Guardian

(Quotes via original reporting)