Ocado is set to face criticism from shareholders today (April 29) over a potential bonus worth up to £14.8m for chief executive Tim Steiner.
Shareholder advisory group Glass Lewis has called on investors to vote against the online group’s “egregious remuneration practices” at its annual general meeting.
It said “we remain concerned about the potential for excessive remuneration” and “question the need for this enhanced incentivisation tool”.
Dan Howard from campaign group ShareAction, which leads the Good Work coalition representing $6.6trn in assets under management, said he planned to enquire why Ocado’s board 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”.
Howard called on the online group 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 and requires its members to pay 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,” he said.
“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.”
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Howard said Ocado’s pay policy meant it was lagging behind industry peers such as Tesco, Sainsbury’s and M&S, all of which have committed to pay their staff at least the real living wage.
Fellow investor, Institutional Shareholder Services said last month it had “material concerns” over Ocado’s proposed remuneration structure, adding that the possible amount on offer was “materially above market norms” and “not in line with UK market standards and investor expectations”.
The online group wants to set up an incentive scheme that could pay out Steiner as much as 1,800% of his £824,570 base salary – worth about £14.8m – if the company’s share price reaches £29.69 in three years’ time and if other performance targets are met.
The group’s shares currently trade at less than £3.60.
If the share price goal is missed but other performance and total shareholder return targets are met, then Steiner would receive an award worth 600% – worth £5m – of his base salary.
The group’s board said in its recent annual report that it was conscious of Steiner’s “unique position as a founder and his long-term focus and strategic vision” as it set out the changes.
Chair of the remuneration committee Julie Southern said the new scheme “offer substantial comparative reward for transformational performance while migrating to a structure that will be more motivating and retentive for executives”.
Last year, almost a third of votes cast at Ocado’s AGM went against its proposed bonus plan that would see Steiner take home £100m over the next five years if share price targets are met.
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