Ocado bosses have approved a £100m bonus plan despite facing opposition from almost a third of shareholders at the grocery tech giant‘s AGM yesterday.
The controversial incentive scheme – known as the Value Creation Plan (VCP) – could see CEO Tim Steiner netting an additional £20m each year over the next five years if share price targets are met, up to a maximum of £100m.
Some 29.3% of Ocado’s shareholders voted against the proposed incentive scheme, which had previously faced pushback in 2019, when a similar number of investors voted against the initial proposition.
A further 28.7% voted against amending the VCP, which has been widely criticised by both advisory groups and major shareholders because it only uses one metric (Ocado’s share price) to determine whether bonuses should be paid.
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Investors have also spoken out about how poorly designed incentive schemes can lead to “excessive awards for management”.
Despite the votes against, plans to extend the controversial scheme beyond its initial five-year term were passed.
Ocado said it “understands the concerns of some shareholders” over the incentive scheme at yesterday’s meeting, but said shareholders recognised the importance of a competitive remuneration policy when attracting top talent to the business.
“In particular, shareholders recognised the challenges associated with recruiting internationally and competing for talent within the technology sector,” the firm said in a statement.
“Furthermore, the Committee notes that it continues to be Ocado’s remuneration policy to aim to set fixed pay towards the lower quartile of the market and offer substantial comparative reward (via our incentives) for transformational performance.”