Four Ocado bosses are sharing an £88m windfall after a bonus scheme pegged to the online grocer’s share price paid out.
The company’s chief executive, Tim Steiner, was the biggest winner, raking in £54m – one of the biggest bonus payouts made by a listed UK company. The group’s finance director, Duncan Tatton-Brown, and chief operating officer, Mark Richardson, each banked £14m from the scheme. Luke Jensen, who runs its tech business, Ocado Solutions, got £6m.
The men were handed the shares in 2014 under a five-year “growth incentive plan” which measured Ocado’s share price growth relative to the FTSE 100.
Once Steiner’s salary and other bonuses are taken into account, his pay packet for 2019 added up to £58.7m. In 2018, Steiner, one of Ocado’s founding directors, was paid £4m. His shareholding in the company is worth £295m. The details of their pay bonanza were published in the company’s annual report.
The top executives have also been awarded a pay rise for 2020 to ensure they remained “motivated”.
After making little progress initially, the company’s share price has rocketed over the past two years. The shares, which were changing hands for about 250p in November 2017, are now worth £12.54 after Steiner sold its grocery-picking expertise to seven foreign supermarket chains. Ocado is now worth £8.9bn, largely because of the success of Ocado Solutions, with the company dubbed the “Microsoft of retail”.
The company had faced a revolt over pay at its 2019 shareholder meeting, when a quarter of investors voted against the remuneration report. However, the remuneration committee had decided not to change pay policies which were “appropriate to incentivise and retain a highly entrepreneurial” management team, its chairman Andrew Harrison said in the annual report.
Ocado reported an annual loss of £214.5m – up from a £44m loss in 2018 – which it blamed partly on last year’s devastating warehouse fire in Andover, Hampshire.
Total sales increased 9% to £1.8bn in the year to 1 December. The loss reflected £94m of one-off charges, the bulk of which related to Andover, which is now being rebuilt. While Ocado is fully insured, there is a time lag before it receives the full payout.
Steiner said that despite the headline losses, the underlying performance of the business was very encouraging. The first overseas depots – belonging to Groupe Casino of France and the Canadian retailer Sobeys – would soon be open, he said, which would be a “milestone” for the Hatfield-based group. Work has also begun on other sites in the UK, as well as in the US and Sweden.
Ocado has received orders to build 30 of its robot-powered warehouses around the world. The sudden influx of orders has forced the company to expand rapidly, taking on 1,300 new staff last year, about half of whom were computer programmers and engineers. This year the company plans to spend more than £600m fitting out new distribution centres.
Last year Marks & Spencer paid £750m for 50% of Ocado Retail, the UK subsidiary that currently has a supply deal with Waitrose. That arrangement finishes at the end of August, when it will be replaced by M&S. Ocado said preparations for the switchover were well underway and reiterated that its product range would be bigger, cheaper and of better quality under the M&S deal.
