This part of the Directors' Remuneration Report sets out the Directors' remuneration paid in respect of the 2018 Financial Year. It details the payments to Directors and the link between Company performance and remuneration of the Chief Executive Officer. This part, together with the "Description of the Remuneration Committee" section in Remuneration at a Glance, constitutes the Annual Report on Remuneration, and will be put to an advisory shareholder vote at the Company's AGM.
Wider Workforce Considerations and Our Approach to Fairness
Ocado is committed to ensuring our workforce has the diversity of talent and expertise that it needs for the business to continue to grow and innovate. Our people are critical to us achieving our strategy and the Remuneration Committee is aware that ensuring our people are rewarded fairly and competitively for their contribution to our success is important for hiring, developing and retaining the highest quality of talent throughout Ocado.
The 2019 Policy is designed in line with the remuneration principles, which reflect the remuneration principles for the Group. A key remuneration principle for the Group is that share awards be used to recognise and reward good performance and attract and retain employees.
The Remuneration Committee receives an annual report from management on Group-wide remuneration. This review covers changes to pay, benefits, pensions and share schemes for all employees in the Group, including the percentage increases in base pay for monthly and hourly paid employees. The Remuneration Committee's work includes monitoring and commenting on the level and structure of remuneration for the Management Committee in relation to various changes to base pay and incentive plans. The Remuneration Committee carefully considers the relevant parts of this report when making decisions on executive remuneration.
To help support alignment across the Group and with the interests of shareholders and reward for Company performance, all UK employees are eligible to participate in the Group Share Incentive Plan and Sharesave plan. The Management Committee participate in an annual bonus plan and the LTIP, with no share deferral or holding periods operating on these plans. For some small groups of senior employees, the Group operates some tailored bonus and long-term incentive arrangements such as the cash-based long-term incentive scheme and management incentive plans.
Employment at Ocado
Our business is built on innovation, on finding solutions, and on delivering world-class service. Our people are critical to us achieving our strategy. We are committed to hiring and developing the highest quality talent throughout Ocado. We operate in sectors and locations where there is strong competition for workers. We keep our recruitment processes under constant review and evolve them to make it easy to apply to work for Ocado while maintaining our high standards. This has allowed us to remain flexible and agile and respond to the changing labour market by using new attraction methods.
Total Shareholder Return
The following graph shows the Total Shareholder Return (TSR) performance of an investment of £100 in Ocado shares from its Admission to the end of the period compared with an equivalent investment in the FTSE 100 and FTSE 250 Indices over the past nine years. These indices were chosen as Ocado has historically been a constituent of the FTSE 250 Index, and has entered the FTSE 100 this year. Both represent a broad equity market index against which the Company can be compared historically. The Company has not paid a dividend since its Admission so the Company's TSR does not factor in dividends reinvested in shares.
As shown in the chart below, Ocado's TSR outperformed the FTSE 250 and FTSE 100 indices over the period.
FTSE 100 TSR
FTSE 250 TSR
Chief Executive Officer Historical Remuneration
The table below summarises in respect of the Chief Executive Officer the single figure of total remuneration, the AIP or bonus plan payment as a percentage of maximum opportunity, and the long-term incentives as a percentage of maximum opportunity for the current period and the previous eight financial years.
|Year||Chief Executive Officer Total Remuneration|
|AIP or Bonus Payment as a Percentage of Maximum Target Achievement|
(% of maximum)
|Value of AIP or Bonus Payment|
|Long-Term Incentives as a Percentage of Maximum Opportunity|
(% of maximum)
- The Chief Executive Officer total remuneration figures prior to the 2013 period represent the previously presented audited information with necessary adjustments for amounts required to be included in the single total figure of remuneration (such as pension amounts) under the new regulations (which first applied to the 2013 financial period).
- From 2010, the Company had the JSOS as the main form of long-term incentive plan. In 2011, the first tranche of JSOS shares vested in that period. For the 2012 and 2013 financial years, the JSOS interests did not have any value at the vesting date. In 2014, the final tranche of JSOS shares vested in that period (the value of such remuneration is noted in the single total figure of remuneration above). The LTIP was implemented in 2013 and the first award had a performance period ending in 2015 and a vesting date in 2016. The GIP and SIP were both implemented in 2014, but have vesting dates in 2019 and 2017 respectively.
- The total remuneration amounts shown above are the amounts restated to account for the final vesting of each of the LTIP awards. For an explanation of this restatement in respect of the 2017 period see note 1 of the total remuneration table. For details of the 2018 period LTIP value, see note 2 of the total remuneration table.
Chief Executive Officer Percentage Change Versus Employee Group
To put the Directors' remuneration into context, the table below sets out the change in salary, benefits, and bonus of the Chief Executive Officer and of all UK employees from the preceding period to the current period.
|Percentage change in salary from 2017 to 2018||3%||3.2%|
|Percentage change in taxable benefits from 2017 to 2018||475%||6%|
|Percentage change in AIP earned from 2017 to 2018||174%||208%|
- Most of the Group’s employees are not entitled to earn an annual bonus payment as part of their remuneration.
- The change in salary data for the Group’s employees is on a per capita basis.
- The change in taxable benefits for the Chief Executive Officer is as set out below.
- UK employees has been chosen as the majority of our workforce is UK-based.
Relative Importance of Spend on Pay
The following table shows the Company's profit and total Group-wide expenditure on pay for all employees for the period and last financial year. The Company has not paid a dividend or carried out a share buyback in the current year nor previous year. The information shown in this chart is:
- Loss – Group loss before tax as set out in Note 2.9 to the consolidated financial statements.
- Total gross employee pay – total gross employment costs for the Group (including pension, variable pay, share-based payments and social security) as set out in Note 2.7 to the consolidated financial statements.
|2 December 2018|
|Profit before tax||(44.4)||(8.3)|
|Total gross employee pay||388.4||335.9|
*2017 restatement was due to the adoption of IFRS 15 during the year. Refer to Note 1.5 to the consolidated financial statements for further details.
Company Share Price
The closing market price of the Company's shares as at 30 November 2018, being the last trading day in the period ended 2 December 2018, was 831.2 pence per ordinary share (2017: 363.5 pence) and the share price range applicable during the period was 337 pence to 1,146 pence per ordinary share.
Total Remuneration (Audited)
The total remuneration for the period for each of the Executive Directors is set out in the table below.
|Tim Steiner||Duncan Tatton-Brown||Mark Richardson||Neill Abrams||Luke Jensen||Total|
|Total Fixed Pay||679||640||405||391||403||377||341||336||307||–||2,135||1,744|
|Total Remuneration in cash||1,218||950||671||544||663||529||566||465||578||–||3,696||2,488|
|ESOS and 2014 ESOS||–||–||–||–||–||–||–||–||–||–||–||–|
|Total for Share Plans||1,859||387||869||181||869||181||583||122||1,156||–||5,336||871|
|Recovery of Sums Paid||–||–||–||–||–||–||–||–||–||–||–||–|
- The value of LTIP awards for 2015 included in the column for the 2017 financial year has been restated to show the actual vested amount (based on the vesting of the award on 22 March 2018 at a price of 527 pence per share). The actual vested amount is £389,000 higher than the estimated vested amount stated in the 2017 annual report of £469,000. The estimated vested amount was based on the three-month average share price from 1 September 2017 to 3 December 2017 of 288 pence per share. No dividends were paid.
- The value of LTIP awards for 2016 included in the column for the financial year has been based on 50% vesting and estimated using the three-month average share price from 30 August 2018 to 2 December 2018 of 860.03 pence per share, as these awards are not capable of vesting until after the end of the period, on 20 March 2019. This value assumes no dividends will be payable and that the Executive Director will not be required to pay an amount to acquire the conditional shares, being the nominal price of 2 pence per share. These estimated figures will be restated in next year's annual report.
- Luke Jensen was granted a Cash LTIP award in 2017 prior to becoming an Executive Director. The value of the Cash LTIP award for 2017 included in the column for the financial year is based on 100% vesting and estimated using the average share price in the final twenty business days of the period, being 804.5 pence per share. The award will vest after the end of the period on 15 March 2019. More detail can be found below.
- Under the Share Incentive Plan, awards of Free Shares and Matching Shares became unrestricted during the period. These awards are explained below.
- Taxable benefits includes one or more of: private healthcare life assurance; private use of a company driver; or a car allowance.
- Luke Jensen was appointed as an Executive Director with effect from 1 March 2018.
Awards granted under long-term incentive plans and share plans only count towards the total remuneration figure for the period in which they vest or where achievement of performance targets is determined in the period. An explanation of each element of remuneration paid in the table is set out in the following section.
Base Salary (Audited)
During the period, the Remuneration Committee reviewed the salaries of the Executive Directors. After taking into account a number of relevant factors which are discussed in more detail below, the Remuneration Committee recommended that all basic salaries be increased. The following table shows the change in each Executive Director's salary.
The changes to base salary were made in line with the Directors' Remuneration Policy. The Executive Directors received an increase in base pay of 3% (rounded accordingly) which was in line with the percentage salary increases for the monthly paid employees of the Group in the period.
Taxable Benefits (Audited)
The Executive Directors received taxable benefits during the period, notably private medical insurance and travel insurance. The Executive Directors also received other benefits, which are not taxable, including income protection insurance, life assurance and Group-wide employee benefits, such as an employee discount. The taxable benefits shown in the Total Remuneration Table below include the private use of a company driver for Tim Steiner, and a car allowance for Luke Jensen. Non-business use of the chauffeur is tracked and is shown as a taxable benefit in the total remuneration table to the extent it was used for that purpose. These benefit arrangements were made in line with the Directors' Remuneration Policy which allows the Company to provide a broad range of employee benefits.
The Company made pension contributions on behalf of the Executive Directors to the defined contribution Group personal pension scheme. The employer contributions to the pension scheme in respect of each Executive Director are made in line with the Group personal pension scheme for all employees. The contributions during the period made on behalf of the Executive Directors were 8% of base salary. These contributions were made in line with the Directors' Remuneration Policy.
Pension contributions can be made to the Executive Directors (and any other employee) as a cash allowance where the Executive Director (or employee) has reached either the HMRC annual tax free limit or HMRC lifetime allowance limit for pension contributions as provided for in the Directors' Remuneration Policy. In accordance with this policy, Tim Steiner, Mark Richardson, Luke Jensen and Neill Abrams have elected to receive part of their pension contributions as an equivalent cash allowance. Duncan Tatton-Brown has elected to receive all of his pension contribution as cash in line with the Company policy.
Annual Incentive Plan (Audited)
The 2018 AIP was based on the performance targets and weightings set out below. The Chief Executive Officer had a maximum bonus opportunity of 125% of salary and the other Executive Directors had a maximum opportunity of 100% of salary.
|Performance conditions||Weighting of each condition||Performance targets required||Actual Performance||Percentage of maximum performance achieved||Annual bonus value achieved (£'000)|
|Tim Steiner||Duncan Tatton-Brown||Mark Richardson||Neill Abrams||Luke Jensen|
|(Retail) Gross salesA||25%||Threshold||£1,580m||£1,598.8m||10.6%||81||40||40||34||40|
|No. of Solutions deals||25%||Commercially|
|Individual objectives||25%||See details below||19.75 - 22.75%||164||81||75||70||86|
- The Remuneration Committee has agreed “threshold” and “maximum” conditions that must be achieved. An award will not vest unless a “threshold” level of the performance condition has been achieved. At “threshold” performance for a financial or Solutions performance measure, 6.25% of total bonus is payable and at “maximum” performance, 25% of total bonus is payable. A straight-line sliding scale applies in relation to the intermediate points between the “threshold” and “maximum”.
- There is no threshold or maximum target set for the individual objectives. Each objective is weighted and scored to provide a total score out of 25. Performance may range from zero to 25.
- The applicable salary used for calculating the bonus payment under the rules of the 2018 AIP is the applicable base salary on the date of payment.
Under the AIP, 50% of any bonus paid is deferred in shares for Executive Directors who have not met their shareholding requirement.
Luke Jensen was appointed as an Executive Director during the period, and as such the amount in the table above represents the award he received prior to his appointment as an Executive Director under the equivalent scheme for senior management.
The Remuneration Committee reviewed performance against the objectives listed in the table below. The Remuneration Committee reviewed the performance of each Executive Director against the measurable performance metrics and based their judgement on a scoring report by the Chief Executive Officer and the Chairman. The Remuneration Committee, in assessing performance, took into account the level of the Group's trading performance compared with UK grocery retail peers and the Group's progress against its strategic objectives.
A number of specific internal objectives are commercially sensitive. The nature of these objectives and their achievement are indicated.
|Successful growth of Ocado.com and other retail platforms in line with business plans.||Continued growth of the retail business, with 12% growth in sales in 2017/18.||Met/|
|Launch and ramp up Erith CFC and continued ramp up of Andover CFC.||Erith CFC successfully launched and ramped in 2018 and successful ramp up of Andover CFC.||Met/|
|Successful signing of platform deal(s) and set up of internal programmes to deliver all deals.||Three platform deals signed in the period, with delivery programmes established.||Met|
|Drive the delivery and costs of technology projects to ensure successful execution of signed Ocado Solutions deals to support UK business growth.||Significant progress made against strategic objectives relating to technology projects.||Ongoing|
|Lead and motivate the senior team to deliver the strategy while driving scale and efficiency where possible throughout the business.||Continued strong leadership of senior management.||Met/|
|Overall performance against individual strategic objectives (maximum opportunity: 25%):||21.5%|
|To prepare and execute a financing strategy to provide financing for Ocado Solutions obligations and future deals.||Presentation of financing strategy to Board and successful execution.||Met/|
|To improve Group communications, particularly in relation to the building of our Solutions business and the Group’s transition to segmental reporting.||Communications improved, with clear presentation of both the Solutions deals and segmental reporting.||Met/|
|To continue to operate an efficient and effective finance, strategy and business development function.||High quality financial and management reporting delivered by finance team.||Met/|
|Provide more challenges to capabilities, particularly for cost effectiveness of technology and development spend.||Challenges made throughout financial year, with some improved cost efficiencies.||Ongoing|
|Overall performance against individual strategic objectives (maximum opportunity: 25%):||21.44%|
|To increase OPW in Andover CFC in line with Ocado’s growth target.||Target OPW rate fully achieved in Andover CFC.||Met|
|To ensure development of technology projects continues on track to enable Solutions partners to go-live in line with target dates.||Tracked monthly in reports to the Board, with all projects on track.||Met|
|To ensure bot improvement programme continues.||Tracked monthly in reports to the Board and continuing improvements ongoing.||Ongoing|
|To increase CFC productivity in line with agreed targets.||CFC productivity continued to improve in the financial year.||Met|
|Demonstrate improvements in hourly paid employees’ working conditions.||Regular updates to the Board, ongoing improvements being made.||Ongoing|
|Overall performance against individual strategic objectives (maximum opportunity: 25%):||19.75%|
|To lead business support departments, ensuring they are able to service changing business needs.||Business support departments continued to deliver a good service, with positive feedback received from the business.||Met|
|Implement GDPR compliance programme successfully.||DPO hired, with documented compliance programme in place and no significant negative impact on business operations.||Met/|
|Legal support for additional Ocado Solutions deals and execution of existing Ocado Solutions deals (including international corporate structure and regulatory compliance). Support for negotiations with existing partners.||Execution of three Solutions deals and support provided on negotiation of Solutions deals. Support provided for existing partners, including advice and negotiations.||Met|
|Successful management of IP portfolio to support business growth.||Tracked monthly in reports to the Board, ongoing extension of IP portfolio.||Met|
|Overall performance against individual strategic objectives (maximum opportunity: 25%):||22%|
|Establish Ocado Solutions as an international solutions partner in grocery e-commerce.||Ocado Solutions established with the signing of three Solutions deals in the financial year.||Met|
|Sign a number of Ocado Solutions deals in the year, with further commercially sensitive details.||Three Solutions deals signed in the financial year and good progress on commercially sensitive targets.||Ongoing|
|To develop an efficient and capable Solutions team, with appointment and integration of a Commercial Director and a Chief Product Officer.||Ocado Solutions team continued to develop in the year. Commercial Director and Chief Product Officer appointed.||Met/|
|Delivery and effective operation of Ocado Solutions deals in line with budgets.||Significant progress made in delivery of partnerships. Programme and account management teams put in place for all partners.||Met/|
|Make an effective contribution to the broader management of the business at Board and executive level.||Continued contribution at Board and executive level.||Ongoing|
|Overall performance against individual strategic objectives (maximum opportunity: 25%):||22.75%|
The three-year performance period for the 2016 LTIP awards expired at the end of the financial year. The Remuneration Committee reviewed the performance against the four equally weighted performance conditions for the 2018 Financial Year and has recommended overall vesting of 50%.
The value of the 2016 LTIP awards in the total remuneration table and below is estimated based on the average Company share price for the final three months of the period, being 860.03 pence per share. The expected vesting date of the 2016 LTIP award is 20 March 2019. Subject to the continued satisfaction of the award conditions, final vesting will be determined.
|Performance conditions||Weighting of each condition||Performance targets required||Actual Performance||Percentage of maximum performance achieved||Estimated LTIP value (£'000)|
|Tim Steiner||Duncan Tatton-Brown||Mark Richardson||Neill Abrams|
|Adjusted retail EBT||25%||Threshold||£20m||£9.6m||0%||0||0||0||0|
|Platform Operational Efficiency||25%||Commercially sensitive||25%||924||429||429||287|
|Platform Capital Efficiency||25%||Commercially sensitive||25%||924||429||429||287|
- The Remuneration Committee has agreed "threshold" and "maximum" conditions that must be achieved. An award will not vest unless a "threshold" level of the performance condition has been achieved. At "threshold" performance for a financial performance measure, 6.25% of the total award will vest and 25% vesting will occur for achieving or exceeding "maximum" performance for a condition. A straight-line sliding scale applies in relation to the intermediate points between the "threshold" and "maximum".
- Details of the number of conditional shares awarded to each Director for the 2016 LTIP awards are shown in the table below.
- Luke Jensen was not an employee at the time of the 2016 LTIP awards and therefore does not have a vesting award.
- The performance targets and actual performance numbers shown for the retail business have not been adjusted for any impact of IFRS 15 on the Group.
Neither retail business target met the threshold. The revenue used as a performance condition for the LTIP includes Retail revenueA generated by Ocado.com and the other Retail sites – Fetch, Sizzle and Fabled – but excludes revenue from Morrisons and the Solutions business.
The adjusted retail EBT measure is not consistent with the segmental reporting changes made in 2017. The performance target for adjusted retail EBT is based on Group EBT less an apportionment of certain costs in a number of areas relating to the Solutions business and is based on 52 weeks. This measure is used by the Remuneration Committee to assess management performance for the 2016 LTIP only. It is not considered an Alternative Performance Measure.
Specific details of the achievement of Platform Operational Efficiency and Platform Capital Efficiency solution for the Financial Year are not disclosed. Although the Remuneration Committee is conscious of the regulations and the Code requirement that performance targets should be transparent, it considers that disclosure of the achievement against these specific targets remains commercially sensitive to the Company and if disclosed could damage the Company’s commercial interests. The Remuneration Committee believes that the targets were stretching and have been applied vigorously.
Cash LTIP (Audited)
Luke Jensen was granted an award under the Cash LTIP scheme in February 2017, prior to his appointment as an Executive Director.
The Cash LTIP is an amount of money that is based on the value of 143,632 of the Company's shares. The final cash amount that the Executive Director is eligible to receive depends on the extent to which the Company achieves a performance target linked to the number of Ocado Solutions deals signed by the Group during the performance period.
The Cash LTIP has a three-year performance period. The performance conditions for the 2017 Cash LTIP allow for the early payment of the award in the event that the maximum performance conditions are satisfied prior to the end of the 2017/18 Financial Year. The performance conditions were satisfied in full during the period and therefore the award will vest in March 2019. Payout of the full value of the award will be based on the average share price of the Company’s shares in the twenty business days prior to the payout date.
Share Incentive Plan
The 2015 award of Free Shares made under the SIP became unrestricted during the period on 10 September 2018. Certain Matching Shares also became unrestricted during the period. Free Shares and Matching Shares awarded under the SIP are subject to a three-year forfeiture period starting from the date of grant. This means that if an Executive Director ceases to be employed by the Group during the three-year period, the Free Shares and Matching Shares will be forfeited. Partnership Shares purchased under the SIP are not included in the total remuneration table as these are purchased by the Executive Directors from their salary, rather than granted by the Company as an element of remuneration. Only the value of Free Shares and Matching Shares that became unrestricted during the period are shown in the total remuneration table. The value shown is the value of the shares on the date that they became unrestricted. Unrestricted shares can be held in Trust under the SIP for as long as the Executive Director remains an employee of the Company.
Recovery of Sums Paid (Audited)
No sums paid or payable to the Executive Directors were sought to be recovered by the Group.
Total Fees (Audited)
The fees paid to the Non-Executive Directors and the Chairman during the period are set out in the remuneration table below. The Non-Executive Directors received no remuneration from the Group other than their annual fee.
|Long-Term Incentives||Recovery of|
- Alex Mahon retired from the Board with effect from 13 December 2017.
- Andrew Harrison took over as Remuneration Committee chairman on 11 April 2018.
- Julie Southern joined the Board with effect from 1 September 2018.
- Robert Gorrie retired from the Board with effect from the 2017 annual general meeting on 13 May 2017.
The remuneration arrangements for the Non-Executive Directors (except the Chairman) were reviewed by the Executive Directors and the Chairman during the period and the basic fees for Non-Executive Directors were increased to £52,000 (2017: £50,000), while the fee for chairing a committee was increased to £13,000 (2017: £12,000).
The Chairman’s fee was reviewed by the Remuneration Committee and was not changed. The Chairman’s fee has not changed since the Chairman’s appointment in March 2013.
Other Remuneration for the Non-Executive Directors (Audited)
In addition to the fees, the Non-Executive Directors are entitled to a staff shopping discount in line with the Group's employees.
The Company has obtained a written confirmation from each Non-Executive Director that they have not received any other items in the nature of remuneration from the Group, other than those already referred to in this report.
Recovery of Sums Paid (Audited)
No sums paid or payable to the Non-Executive Directors were sought to be recovered by the Group.
Other Remuneration Disclosures
Executive Directors' Service Contracts
Each of the Executive Directors has a service contract with the Group. The terms of these contracts are consistent with the Directors' Remuneration Policy, though the contracts provide for payment in lieu of notice of one times basic salary only (and do not include other fixed elements of pay, which are permitted by the policy). The service contracts for each of the Executive Directors are continuous until terminated by either party (on 12 months' notice if terminated by the Company, or six months' notice if terminated by the Director).
Non-Executive Directors' Letters of Appointment
The Chairman and the Non-Executive Directors do not have service contracts and were appointed by letter of appointment for an initial period of three years, subject to annual re-appointment at the annual general meeting and usually for a maximum of nine years. There are no provisions in the letters of appointment for payment for early termination. A Non-Executive Director's appointment may be terminated by either party giving to the other not less than one month's notice, except in the case of the Chairman, which requires six months' notice by either party. Copies of the letters of appointment and the service contracts of the Executive Directors are available for inspection at the Company's registered office.
|Director||Date of Appointment||Notice Period||Expiry of Nine Year Term|
|Stuart Rose||11 March 2013||6 Months||Mar 2022|
|Ruth Anderson||9 March 2010||1 Month||Mar 2019|
|Andrew Harrison||1 March 2016||1 Month||Mar 2025|
|Emma Lloyd||1 December 2016||1 Month||Dec 2025|
|Douglas McCallum||3 October 2011||1 Month||Oct 2020|
|Jörn Rausing||13 March 2003||1 Month||N/A|
|Julie Southern||1 September 2018||1 Month||Sep 2027|
Director Retirement Arrangements and Payments for Loss of Office (Audited)
As announced on 14 December 2017, it was determined in accordance with the Directors' Remuneration Policy that the arrangements set out below should apply in relation to Alex Mahon's remuneration on retirement.
|Element of Remuneration||Treatment|
|Remuneration Payments||All outstanding fees were paid to Alex Mahon up to 13 December 2017 in accordance with the terms of her letter of appointment. No payments are expected after the date of retirement.|
|Payment for Loss of Office||No payment for loss of office or other remuneration payment was made or is expected to be made to Alex Mahon.|
|Share Schemes||At the time of retirement, Alex Mahon was not a participant in a Group share scheme.|
Director Appointment Arrangements (Audited)
As announced on 5 July 2018, Julie Southern was appointed to the Board as a Non-Executive Director with effect from 1 September 2018. Julie Southern's remuneration is in line with the Directors' Remuneration Policy. On appointment, Julie Southern's basic annual fee was £52,000, which was in line with the other Non-Executive Directors. Julie Southern will not receive any other benefits or payments, in line with the Directors' Remuneration Policy.
Payments to Past Directors (Audited)
The Company does not have any arrangements for payments to any former Directors of the Company.
Enforcing the Directors' Remuneration Policy
The Company has not made any payments to a Director outside of the Directors' Remuneration Policy. All of the decisions regarding executive remuneration for the period have been made in line with the Directors' Remuneration Policy.
No Director has options over Company shares outside one of the Company's recognised share schemes.
External Remuneration for Executive Directors
As at the date of this Annual Report:
- In addition to his role as Executive Director of the Company, Neill Abrams is an alternate non-executive director of Mr Price Group Limited, a FTSE/JSE Top 40 company listed on the Johannesburg Stock Exchange. Neill does not receive any remuneration for carrying out that role.
- In addition to his role as Executive Director of the Company, Mark Richardson is a non-executive director of Paneltex Limited. This role does not involve any remuneration paid or payable to Mark.
- In addition to his role as Executive Director of the Company, Luke Jensen is a non-executive director of Hana Group SAS, registered in France. In 2018 he received Board attendance fees of €25,000 for this role.
Director Shareholdings (Audited)
The table below shows the beneficial interests in the Company's shares of Directors serving at the end of the period, and their connected persons, as shareholders and as discretionary beneficiaries under trusts. The table also shows current compliance with the Director shareholding requirements in the Directors' Remuneration Policy as at the date of this Annual Report. All Directors comply with the Director shareholding requirements.
|Director||Ordinary Shares of 2 Pence each held at 2 December 2018||Ordinary Shares of 2 Pence each held at 3 December 2017||Minimum shareholding requirement (% of Base Salary or Fee)||Met minimum shareholding||Basis for compliance|
|Tim Steiner||23,475,936||7,411||15,245,052||14,293,130||200||Yes||Indirect and direct shareholdings|
|Lord Rose||1,202,284||–||1,202,284||–||100||Yes||Direct shareholdings|
|Duncan Tatton-Brown||1,400,753||67,235||583,041||61,869||200||Yes||Indirect and direct shareholdings|
|Mark Richardson||1,482,032||12,361||265,530||6,994||200||Yes||Indirect and direct shareholdings|
|Neill Abrams||3,050,825||1,265,268||768,867||1,319,704||200||Yes||Indirect and direct shareholdings|
|Luke Jensen||107,314||76,780||n/a||n/a||200||Yes||Indirect and direct shareholdings|
|Ruth Anderson||80,000||–||80,000||–||100||Yes||Direct shareholdings|
|Andrew Harrison||18,166||–||18,166||–||100||Yes||Direct shareholdings|
|Emma Lloyd||17,300||–||17,300||–||100||Yes||Direct shareholdings|
|Douglas McCallum||100,000||–||100,000||–||100||Yes||Direct shareholdings|
|Jörn Rausing||–||69,015,602||–||69,015,602||100||Yes||Indirect shareholdings|
- The indirect holding for Neill Abrams includes holdings of Caryn Abrams (wife of Neill Abrams) who holds 78,109 (2017: 79,701) ordinary shares, Daniella Abrams (daughter of Neill Abrams) who holds 1,363 (2017: 1,363) ordinary shares, Mia Abrams (daughter of Neill Abrams) who holds 2,143 (2017: 1,363) ordinary shares, Joshua Abrams (son of Neill Abrams) who holds 2,143 (2017: 1,363) ordinary shares and as a discretionary beneficiary of a trust holding 74,100 (2017: 133,100) ordinary shares.
- The indirect holding for Duncan Tatton-Brown includes a holding by Kate Tatton-Brown (wife of Duncan Tatton-Brown) who holds 49,889 (2017: 59,889) ordinary shares.
- The indirect holding for Mark Richardson includes a holding by Rebecca Richardson (wife of Mark Richardson) who holds 4,970 (2017: 4,970) ordinary shares.
- The indirect holding for Luke Jensen includes a holding by Sandrine Jensen (wife of Luke Jensen) who holds 74,670 ordinary shares.
- On 31 August 2018, Tim Steiner re-registered 8,192,395 JSOS shares into his own name, leaving no interests in the JSOS.
- On 20 September 2018, Duncan Tatton-Brown re-registered 799,867 JSOS shares into his own name, leaving no interests in the JSOS.
- On 20 September 2018, Mark Richardson re-registered 1,198,657 JSOS shares into his own name, leaving no interests in the JSOS.
- On 21 September 2018, Neill Abrams re-registered 2,766,458 JSOS shares into his own name, leaving no interests in the JSOS.
- There have been no changes in the Directors’ interests in the shares issued or options granted by the Company and its subsidiaries between the end of the period and the date of this Annual Report, except shares held pursuant to the SIP, as set out above.
- No Director had an interest in any of the Company’s subsidiaries at the beginning or end of the period.
- On 13 May 2016, in respect of various contracts for the transfer of shares (as described on pages 235 and 238 of the Prospectus), Tim Steiner delayed the date on which completion under the contracts for transfer would take place to 30 June 2019, or such later date as the parties may agree.
- On 11 May 2016, in respect of various contracts for the transfer of shares (as described on pages 235 and 238 of the Prospectus), Neill Abrams delayed the date on which completion under the contracts for transfer would take place to 30 June 2019, or such later date as the parties may agree.
- Where applicable, the above indirect holdings include SIP Partnership and Free Shares held under the SIP, which are held in trust.
- The Executive Director shareholdings have increased during the period due to the vesting of the 2015 LTIP awards. Read more below.
- Julie Southern was appointed on 1 September 2018. Non-Executive Directors are expected to hold shares equivalent to one year’s annual fee. This holding can be built up over three years from appointment. Therefore, while Julie Southern does not hold the requisite number of shares to comply with the shareholding requirement currently, she is compliant with the policy.
- The assessment for shareholding compliance is based on the current annualised salary or fee (as set out in the total remuneration tables) which applied on 21 January 2019 (being the last practicable date prior to the publication of this Annual Report) and the higher of the original purchase price(s) or the current market price (being 885.60 pence per share on 21 January 2019), of the relevant shareholdings.
Director Interests in Share Schemes (Audited)
At the end of the period, the Executive Directors' total LTIP awards were as follows:
|Director||Type of Interest||Date of Grant||Basis on Which Award is made|
(% of Salary)
|Number of Shares||Face Value of Award|
|End of Performance Period||Expected Vesting Date|
|Tim Steiner||Conditional shares||17/03/16||200||429,885||1,122,000||02/12/18||20/03/19|
|Duncan Tatton-Brown||Conditional shares||17/03/16||150||199,310||520,000||02/12/18||20/03/19|
|Mark Richardson||Conditional shares||17/03/16||150||199,310||520,000||02/12/18||20/03/19|
|Neill Abrams||Conditional shares||17/03/16||120||133,655||349,000||02/12/18||20/03/19|
|Luke Jensen||Conditional shares||20/02/17||150||206,913||527,996||01/12/19||20/02/20|
- The award given to Neill Abrams in 2017 was wrongly stated in the 2017 annual report as 150% of his salary at 176,346 shares and has been restated here as the correct figure of 120% of his salary.
Granted: LTIP awards were made to Executive Directors in respect of 2018 of up to 150% of annual base salary and in the case of the Chief Executive Officer, an LTIP award with a total value of up to 200% of annual base salary. Such awards were made in accordance with the Directors' Remuneration Policy. The number of shares subject to an LTIP award was determined based on a price of 540.93 pence per share, being the volume weighted average price of the Company's ordinary shares on the three trading days prior to 1 March 2018 (being the LTIP grant date).
The 2018 LTIP awards are subject to four performance metrics. The rationale for, and basis of measurement of, the performance metrics is as follows:
|Performance target||Commercial rationale||Basis of measurement||Vesting Schedule|
Retail business – profitability and revenue (25% each)
Rewards top-line sales growth for the Retail business in line with the Group’s strategy and the creation of financial returns to shareholders.
Earnings before interest and tax and revenue for the Retail business for the 2019/20 Financial Year.
Threshold performance: 25% vests (6.25% of each condition).
Maximum performance: 100% vests (25% of each condition).
Vesting will be on a straight-line basis between the “threshold” and the “maximum”.
Each target is discrete and can be achieved separately. Full vesting will only occur where exceptional performance levels have been met and significant shareholder value created.
Platform business – Platform Efficiency and the Ocado Solutions revenueA (25% each)
Rewards progress and achievement with the proprietary infrastructure solution and Solutions business, which is a key strategy objective.
Efficiency of the platform business and Ocado Solutions revenueA.
The platform efficiency target is made up of two separate targets, each comprising 12.5%, and being platform operational efficiency and platform capital efficiency.
The specific performance conditions are not disclosed due to their commercial sensitivity, on the basis that if disclosed it would be likely to damage the Company’s commercial interests. The Company will disclose the performance conditions after the end of the performance period, to the extent that the targets are not considered commercially sensitive at the time of disclosure.
Vested: The 2015 LTIP awards had a vesting date of 22 March 2018 for a three-year performance period that ended with the 2016/17 Financial Year. As explained in the 2017 annual report, the Remuneration Committee reviewed the performance against the award's four equally weighted performance conditions, which were Retail RevenueA, adjusted retail EBT*, Platform Operational Efficiency and Platform Capital Efficiency for the 2016/2017 financial year. Achievement against the performance targets was 25%.
The performance period for the 2016 LTIP awards finished in the year, although these awards are not capable of vesting until 20 March 2019. More detail can be found in the LTIP section.
* This measure is used by the Remuneration Committee to assess management performance for the LTIP only. It is not considered an Alternative Performance Measure.
Sold: As a result of the vesting of the 2015 LTIP awards, the Executive Directors sold shares in the Company. The Directors sold sufficient of the shares that vested to cover the cost of the tax and National Insurance. The details of the LTIP vesting and resulting share sale for each Executive Director are set out below.
|Director||Date of Grant||Grant Price|
|Number of Shares Vested||Date of Vesting and Sale||Share Price on Vesting|
|Value of Shares Vested|
|Shares Sold on Vesting||Shares Retained on Vesting|
- For more details see the total remuneration table.
Lapsed: No LTIP awards lapsed during the period.
At the end of the period, the Executive Directors' total GIP awards were as follows:
|Director||Type of Interest||Date of Grant||Number of Share Options||Face Value of Award|
|End of Performance Period||Exercise Period|
|Tim Steiner||Option with nil exercise price||08/05/14||4,000,000||12,744,000||08/05/19||08/05/19 – 31/05/24|
|Duncan Tatton-Brown||Option with nil exercise price||08/05/14||1,000,000||3,186,000||08/05/19||08/05/19 – 31/05/24|
|Mark Richardson||Option with nil exercise price||08/05/14||1,000,000||3,186,000||08/05/19||08/05/19 – 31/05/24|
|Luke Jensen||Option with nil exercise price||22/02/17||470,000||1,191,450||08/05/19||08/05/19 – 31/05/24|
- Luke Jensen was awarded a GIP award on his joining the Group but prior to becoming a Director.
The GIP operates as follows:
|Award||Grant Details||Performance Conditions||Vesting Schedule|
Face value of the options determined based on a price of 318.60 pence per share, being the price on date of grant.
The face value of the options awarded to Luke Jensen is based on a price of 253.5 pence per share, being the price on date of grant.
Single performance condition to be satisfied over five years:
Share price of the Company relative to the growth of the FTSE 100 Share Index over that period.
Assessed using a three-month averaging period.
Performance schedule set out in the table below.
Condition of vesting that each Executive Director holds, and retains throughout the performance period, shares in the Company equivalent to:
- CEO: 100% of annual salary;
- CFO and COO: 50% of annual salary;
at the date of the award.
Granted: No awards under the GIP were granted during the period.
|Performance Schedule||Percentage of Award Vesting (%)|
|Growth of less than the FTSE 100 Share Index +5% p.a.||0|
|Growth in the FTSE 100 Share Index +5% p.a.||25|
|Growth in the FTSE 100 Share Index +10% p.a.||50|
|Growth in the FTSE 100 Share Index +15% p.a.||75|
|Growth in the FTSE 100 Share Index +20% p.a. (or more)||100|
Vested: No awards under the GIP vested during the period. The awards are expected to vest in May 2019 (if and to the extent that the vesting criteria are met).
Sold: No awards under the GIP have been exercised or sold by an Executive Director during the period.
Lapsed: No awards under the GIP lapsed during the period.
ESOS and 2014 ESOS (Audited)
At the end of the period, the Executive Directors held options under the ESOS or 2014 ESOS as follows:
|Director||Type of Interest||Date of Grant||Number of Share Options||Exercise Price|
|Face Value of Grant|
|Duncan Tatton-Brown||Option||12/08/13||9,923||3.02||29,967||08/07/16 – 07/07/23|
|Luke Jensen||Option||15/03/17||11,709||2.562||29,998||15/03/20 – 14/03/27|
Granted: The Remuneration Committee does not, as at the date of this Annual Report, have any intention of making a further award of options under the ESOS or 2014 ESOS to the existing Executive Directors. Existing options held by the Executive Directors under the ESOS were granted to Duncan Tatton-Brown on his appointment in 2013 and Luke Jensen on his joining the Group, but prior to becoming a Director in 2017. None of the grants of ESOS options to the Executive Directors are subject to performance conditions.
Vested: No awards under the ESOS vested during the period.
Sold: During the period, Mark Richardson exercised 70,000 options with an exercise price of 120.00 pence per option. The gain made by Mark Richardson on the exercise of share options was £540,300.
|Director||Date of Grant||Number of Options||Exercise Price|
|Date of Exercise||Gain|
Lapsed: No options under the ESOS lapsed during the period.
At the end of the period, interests in shares held by the Executive Directors under the SIP were as follows:
|Director||Partnership Shares Acquired in the Year||Matching Shares Awarded in the Year||Free Shares Awarded in the Year||Total Face Value of Free Shares and Matching Shares Awarded in the Year (£)||Total SIP Shares Held 02/12/2018||SIP Shares that Became Unrestricted in the Period||Total Unrestricted SIP Shares Held at 02/12/2018|
- Unrestricted shares are those which have been held beyond the three-year forfeiture period.
- The value of the share awards made under the SIP is based on the middle market quotation of a share on the trading day immediately preceding the date of grant.
Granted: The Directors continued their SIP participation during the period. The SIP scheme is made available to all employees. The SIP allows for the grant of a number of different forms of awards. An award of Free Shares was made to the Executive Directors in September 2018 under the terms of the SIP and the Directors' Remuneration Policy. "Free shares" of up to £3,600 of ordinary shares may be allocated to any employee in any year. Free Shares are allocated to employees equally on the basis of salary, as permitted by the relevant legislation.
An award of Matching Shares was made to those Executive Directors who purchased Partnership Shares (using deductions taken from their gross basic pay) under the terms of the SIP and in accordance with the Directors' Remuneration Policy. See more details about the SIP.
The Executive Directors continued their membership in the SIP after the end of the period and were therefore awarded further Matching Shares pursuant to the SIP rules. Between the end of the period and 21 January 2019, being the last practicable date prior to the publication of this Annual Report, the Executive Directors acquired or were awarded further shares under the SIP as set out in the table below:
|Director||Partnership Shares Acquired||Matching Shares Awarded||Free Shares Award||Total Face Value of Free Shares and Matching Shares|
|Total SIP Shares|
- The value of the share awards made under the SIP is based on the middle market quotation of a share on the trading day immediately preceding the date of grant.
Vested: For details of Free Shares and Matching Shares that became unrestricted in the period, see SIP (Audited) table.
Sold: No shares held under the SIP have been sold by an Executive Director.
Lapsed: No shares held by an Executive Director under the SIP lapsed during the period.
Sharesave Scheme (Audited)
At the end of the period, the Executive Directors' option interests in the Sharesave scheme were as follows:
|Director||Type of Interest||Date of Grant||Number of Share Options||Exercise Price|
|Tim Steiner||Options||05/08/16||7,894||2.28||17,998||01/12/19 – 01/05/20|
|Duncan Tatton-Brown||Options||05/08/16||7,894||2.28||17,998||01/12/19 – 01/05/20|
|Mark Richardson||Options||05/08/16||7,894||2.28||17,998||01/12/19 – 01/05/20|
|Neill Abrams||Options||05/08/16||7,894||2.28||17,998||01/12/19 – 01/05/20|
Granted: No awards under the Sharesave were granted during the period.
Vested: No awards under the Sharesave in which the Executive Directors had Sharesave options vested during the year.
Exercised: No awards under the Sharesave were exercised or sold by the Executive Directors during the period.
Awards granted under the Company's Sharesave, ESOS, 2014 ESOS and SIP schemes are met by the issue of new shares when the options are exercised or shares granted. Awards granted under the GIP may be met by the issue of new shares, the transfer of shares from treasury, or the purchase or transfer of existing shares by the EBT (where available). Awards vesting under the LTIP are typically satisfied by the issue of new shares and transfer of existing shares by the EBT.
There are limits on the number of shares that may be allocated under the Company's share plans. These dilution limits were recommended by the Remuneration Committee and incorporated into the rules of the various share schemes, which have been approved by the Company's shareholders.
The dilution limits restrict the commitment to issue new ordinary shares or reissue treasury shares under all share schemes of the Group to 10% of the nominal amount of the Company's issued share capital and under the LTIP and the GIP (and any other selective share scheme) to 5% of the nominal amount of the issued share capital of the Company in any rolling ten-year period. These limits are consistent with the guidelines of institutional shareholders.
Impact on Dilution
The Company monitors the number of shares issued under these schemes and their impact on dilution. The charts below show the Company's commitment, as at the last practicable date prior to the publication date of this Annual Report being 21 January 2019, to issue new shares in respect of its share schemes assuming all performance conditions are met, all award holders remain in employment to the vesting date and all awards are settled in newly issued shares. For these purposes, no account is taken of ordinary shares allocated prior to the Company's Admission.
All Share Plans
Discretionary Share Plans
See Alternative Performance Measures