Ocado bosses to take home extra £9m in bonuses after overseas deals success
Chief executive Tim Steiner is among top bosses set for a bumper payout after shares surged more than 270% in the past year.
Bosses at Ocado are set to share an extra £9 million in bonuses after the online grocer’s stock price rocketed thanks to a string of international deals.
The group revealed the executive windfall in its half-year results, which is set to see the shares bonus reach £14 million when it pays out next year, based on the current share price.
The majority will be shared between Ocado’s senior bosses – chief executive Tim Steiner, finance director Duncan Tatton-Brown and chief operations officer Mark Richardson – although some of the handout will go to other managers and staff.
But the payout is just one of many share incentive schemes for the group’s bosses and it is thought Mr Steiner could pick up a record bonus next year, with one report suggesting he could be in line for as much as £110 million.
The extra bonus payout contributed to Ocado’s slump into the red during the six months to June 3, with pre-tax losses of £9 million against pre-tax profits of £7.7 million a year earlier.
It comes after a recent surge in Ocado’s shares, which have risen by more than 270% in the past year as it has announced long-awaited international deals – catapulting it into the FTSE 100 Index for the first time.
Ocado’s share price had been held back in previous years after it was slow to sign its first international deal providing IT solutions to other retailers, which is seen as the group’s main growth engine.
But the cost of developing this side of the business, as well as developing new warehouses to support its UK retail operation, have taken its toll on the group’s bottom line.
It saw group-wide underlying earnings fall 13.9% to £38.9 million for the half-year.
Ocado’s solutions arm reported an underlying interim loss of £2 million against earnings of £400,000 a year earlier after significant investment to secure its international tie-ups.
It warned that earnings in the unit would remain under pressure as it spends another £4 million on its technology and the Ocado Smart Platform.
The group had already cautioned in February that investment would hit earnings this year, with spending set to surge to £210 million.
Shares initially slipped as much as 7% after the interim results, before recovering to stand nearly 2% higher.
Chief executive Tim Steiner said: “This is a transformational period for Ocado.
“We have developed unique and proprietary technology to offer retailers an end-to-end operating solution for grocery retail that enables them to meet the changing needs of consumers.”
He added: “In order to fully capitalise on the opportunities ahead of us, we are working at pace, investing more and focusing sharply on execution to bring on new capacity in the UK and to achieve successful outcomes for our partners.”
Retail revenue growth slowed to 11.7% in the first half after the Beast from the East hit at the start of the year.
Retail earnings remained largely flat, edging 0.7% higher to £45.5 million after investment in its new warehouse at Andover in Hampshire, with costs of a new site in Erith, south-east London, set to weigh on earnings in the second half.
But Ocado said retail earnings would start to “improve significantly” over the remainder of its financial year as the benefits of the new warehouses start to bear fruit.
Ocado, which works with Morrisons in the UK, has cheered investors with a series of deals – most recently signing up US giant Kroger in May.
Tom Stevenson, investment director from Fidelity Personal Investing’s share dealing service, said: “No one is really focused on its results in the short term.
“Rather it is the enormous potential of what looks like becoming the platform of choice for the online grocery business.”