Ocado boss Tim Steiner’s near £100m in pay raises ‘serious concerns’

Ocado CEO's £94m Pay Raises Spark Concerns Over Executive Compensation

Ocado boss Tim Steiner s near 100m - Ocado’s chief executive, Tim Steiner, has amassed nearly £94 million in compensation since the company’s initial public offering in 2010, according to a recent analysis by the High Pay Centre. Despite this substantial payout, Ocado’s share price has recently dropped below its flotation level, raising questions about the alignment of executive rewards with company performance. The revelation has intensified scrutiny of the UK’s executive pay system, with critics arguing that incentives often favor high-profile leaders over broader shareholder interests.

Steiner’s Career and Leadership Challenges

Steiner, a former Goldman Sachs trader, co-founded Ocado in 2000 and played a pivotal role in its successful stock market listing a decade later. Over the years, he steered the company through major partnerships, including collaborations with Morrisons, Marks & Spencer, and a recent alliance with Asda. However, these achievements have not quelled shareholder dissatisfaction, particularly as the company’s share price has continued to fall. The High Pay Centre’s report highlights that Steiner’s compensation package included significant share awards, some of which have seen their value fluctuate since the time of issuance.

“Tim Steiner’s pay trajectory illustrates a broader problem in the UK’s broken executive pay framework: compensation is increasingly shaped by sporadic, outsized awards, rather than being linked to genuine performance,” said Paddy Goffey, the High Pay Centre’s research head. The £59m figure in 2019, attributed to a series of technology sales to international supermarkets, underscores how incentive structures can create dramatic spikes in pay that are difficult to justify against company results or employee conditions. “This raises serious concerns about proportionality, accountability, and fairness in the pay-setting process,” Goffey added.

The debate over Steiner’s remuneration has gained momentum as reports suggest Ocado’s board is exploring potential replacements. Sky News recently revealed that the company has approached Niklas Heuveldop, CEO of Vonage (a division of Swedish telecom giant Ericsson), for the role. While the extent of Heuveldop’s interest remains unclear, the board’s actions indicate a shift in leadership strategy. Sources close to Ocado attribute the succession plan to Adam Warby, the company’s newly appointed chair since December 2024. Warby, who previously led the headhunter Heidrick & Struggles for five years, initiated the search quietly, without consulting Steiner, amid pressure from declining share prices.

Share Price Decline and Shareholder Divisions

Ocado’s shares have plummeted to 172p, below the 2010 flotation price of 180p, further fueling investor discontent. Although the company’s market value has grown to approximately £1.4bn, the share price slump reflects a broader erosion of confidence. With more shares outstanding today than in 2010, the value of early investors’ stakes has been diluted, creating tension among shareholders. Some argue that the current leadership structure has not adequately addressed these challenges, while others defend Steiner’s contributions to Ocado’s growth.

The decline in share price has been exacerbated by setbacks in Ocado’s international expansion. In November, Kroger, a major US partner, announced the closure of three warehouses using Ocado’s technology, and two months later, Sobeys, its Canadian collaborator, shut down a Calgary facility. These moves have dampened optimism about the future of automated grocery distribution, especially after Steiner’s own admission this year that the US market for large automated centers is smaller than anticipated. The once-rosy projections during the pandemic, when shares reached nearly £28, have since been overshadowed by financial realities.

Analyst Perspectives on Steiner’s Role

Clive Black, an analyst at Shore Capital, noted that Steiner’s pay package, while steep, may be seen as a necessary investment given his leadership in transforming Ocado into a FTSE 100 business. “Ocado’s returns on invested capital have been poor, and it has barely made a profit in its entire existence,” Black said. “Yet, the CEO has managed to create a high-profile company, and those who invested and sold shares at the right time have reaped significant rewards.” However, the analyst also acknowledged that the board’s consideration of Steiner’s departure reflects a growing impatience with his compensation, particularly in light of the company’s struggles.

Despite the criticism, some shareholders remain loyal to Steiner, citing his instrumental role in Ocado’s development. The company’s recent performance, however, has left many divided. While Steiner’s vision helped Ocado establish itself as a technological leader, the recent share price drop and operational challenges have sparked calls for a reevaluation of executive pay. The High Pay Centre’s analysis emphasizes that the £94m in payouts since 2010 highlights a system where leaders can accumulate massive rewards even during periods of underperformance.

As the board weighs its options, the potential exit of Steiner adds uncertainty to Ocado’s future. The company’s valuation has more than doubled since its flotation, yet its shares have lost over 90% of their value in the past five years. This discrepancy underscores the complex relationship between executive compensation and shareholder returns. The recent outreach to Heuveldop suggests that Ocado is actively seeking a new direction, but the transition may not be straightforward. The board’s decision to initiate succession planning without Steiner’s input has raised questions about transparency and fairness in the process.

For now, the debate continues. While Steiner’s achievements are acknowledged, the timing of his pay raises and the company’s current financial state have brought his compensation under fire. The High Pay Centre and other advocacy groups argue that the pay-setting framework lacks accountability, allowing executives to secure substantial rewards even when the company’s performance falls short. As Ocado’s shares continue to trade below their 2010 level, the question remains: is Steiner’s pay justified, or does it signal a need for structural change in how executive compensation is determined?

Industry observers suggest that the board’s move to explore alternatives reflects a strategic reassessment. With Warby at the helm, the company may be positioning itself for a new era, but the decision to target Steiner’s leadership could have long-term implications. The High Pay Centre’s report serves as a reminder that executive pay in the UK often diverges from traditional performance metrics, favoring long-term incentives over short-term results. As the shareholder vote looms, the outcome could shape not only Ocado’s future but also the broader conversation about executive compensation in the tech sector.