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Ocado approves £100m CEO bonus despite rebel shareholder votes

Ocado share price bonus

Around two-fifths of shareholders at British online grocery delivery company Ocado have voted against the executive bonus plan to give CEO Tim Steiner a £100m payout over the next five years.

A recent shareholder vote saw just over 29% reject the company’s previously devised remuneration policy.

Ocado’s remuneration committee sought approval for a three-year extension to the bonus scheme and despite a significant faction of rebel shareholders, the plan was ultimately approved.

The contested executive bonus scheme approval comes as the Ocado share price has plummeted by 46% since the start of the year as the pandemic boom for online grocers continues to unwind.

The online delivery surge of the pandemic, despite benefiting Ocado, also saw the rise of rapid grocery delivery companies like Gorillas and Getir, which directly compete with Ocado.

The head of Ocado Retail – a joint venture of M&S Group and Ocado Group – previously expressed scepticism over rapid delivery.

Ocado fails to hit share price target

The bonus scheme, which was initially announced in 2019, is linked to the performance of company stock. However, Ocado failed to hit the share price target that would trigger Steiner’s £20m payout.

While a significant proportion tried to block the extension amid stock concerns, the scheme has now been extended by an additional five years to 2027.

The recent pay proposal came under criticism from Ocado’s leading shareholder, Royal London Asset Management (RLAM).

A spokesperson for RLAM described the group’s concern, saying the bonus plan was an “example of how poorly designed incentive plans” could “lead to excessive awards for management”.

Ocado released a statement following the approval, saying: “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 statement went on to say that “challenges associated with recruiting internationally and competing for talent within the technology sector”.