Ocado Faces Shareholder Revolt Over CEO's £15mn Bonus Scheme
In a recent shareholder meeting, Ocado encountered a 19% voter revolt over a new pay scheme proposed for co-founder and CEO Tim Steiner. The plan, allowing Steiner to potentially receive up to £15mn in bonuses, has come under fire from advisory groups due to concerns of excessive pay. This scrutiny is compounded by Steiner's history of large payouts, including the £59mn he received in 2019 despite the company's £215mn loss. Ocado, once thriving from pandemic-driven success, has encountered a downturn, leading to a sharp drop in its shares and making it one of the most shorted stocks in the London market.
Key Takeaways
- Ocado experienced a shareholder revolt with 19% of votes opposing the new pay scheme.
- The scheme includes a bonus share award of up to £15mn for CEO Tim Steiner, based on certain performance metrics.
- Steiner's potential award is equivalent to 1,800% of his £824,570 base salary, raising concerns about excessive compensation.
- In 2019, Steiner received £59mn despite Ocado's £215mn loss that year.
- Ocado's shares have plummeted by over 50% since the beginning of 2022, and the company has become one of the most shorted stocks on the London market.
Analysis
The shareholder revolt at Ocado brings to light the escalating unease surrounding executive remuneration, especially as the company grapples with maintaining its pandemic-induced prosperity. The proposed £15mn bonus for CEO Tim Steiner, amounting to 1,800% of his base salary, has drawn criticism from advisory groups and shareholders for being excessive. This comes on the heels of Steiner's £59mn windfall in 2019, despite Ocado's staggering £215mn loss that same year. The company's recent setbacks, coupled with its shares plunging by over 50% in 2022, could exacerbate the situation.
Furthermore, financial institutions holding substantial Ocado shares might face losses due to the declining stock price and heightened scrutiny. Over time, this episode could pave the way for regulatory interventions and more stringent guidelines governing executive pay. It could also influence CEO compensation structures in other publicly traded companies. The UK government, keen on fostering investment and economic growth, is likely to take notice of this issue.
Did You Know?
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Shareholder revolt: A shareholder revolt, also termed a "vote of no confidence," transpires when a significant number of shareholders oppose a company's proposed decision or leadership. This dissent can signal dissatisfaction with the company's performance, management, or specific policies, such as executive compensation packages.
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Bonus share award: This form of employee incentive involves a company granting additional shares to an employee, typically as part of a compensation or reward program. The number of shares bestowed may be contingent on the employee meeting specific performance targets or objectives.
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Shorted stocks: Short selling, also referred to as 'shorting', is an investment tactic where an investor borrows shares of a stock from a broker and sells them, anticipating a decline in the stock price. Companies with high short interest, like Ocado, are regarded as 'shorted stocks' and may be susceptible to additional market volatility.