Introduction

Ocado is seeking shareholder approval for a new Directors' Remuneration Policy (the"2019 Policy") at the 2019 AGM. If approved, it will apply to payments made from this date. The 2019 Policy is intended to apply for a period of three years from the AGM.

The Directors' Remuneration Policy was approved by shareholders at the 2017 annual general meeting. The current Directors' Remuneration Policy includes three variable remuneration plans: the Annual Incentive Plan, Long Term Incentive Plan and Growth Incentive Plan. The Company is seeking to reduce the number of plans to two by consolidating the current AIP and LTIP into a single incentive plan based on a new AIP and introducing a Value Creation Plan.

The Remuneration Committee has taken on board the feedback received from shareholders both in previous years on matters related to remuneration and governance, and also in respect of the extensive shareholder consultation carried out in advance of putting this 2019 Policy to shareholders for approval.

Our remuneration principles, which we also aim to cascade throughout the business, underpin our remuneration policy. These principles are that our remuneration should:

  • Support long-term success of the business and sustainable long-term shareholder value.
  • Be relevant and aligned to the business strategy and achievement of planned business goals.
  • Reflect and support the entrepreneurial and high performance culture of the business.
  • Be compatible with the Group's risk policies and systems.
  • Link above-market payouts only to outstanding results.
  • Ensure that performance-related pay constitutes a proportion of the overall package appropriate to each level of the organisation.
  • Provide a balance between attracting, retaining and motivating the right calibre of candidates and supporting equal opportunity and diversity of talent.
  • Be clear and explainable to appropriate stakeholders.

Link with Strategy

The key objective to be achieved through the 2019 Policy is to support the Group's main strategic objectives of expansion and high growth. The incentive schemes contain specific performance measures designed to support the objectives of accelerating retail business performance in the short and medium term (for example, EBITDAA and Gross SalesA (Retail) targets) and the objectives of creating long-term success and sustainable long-term shareholder value (for example, key strategic targets concerning the delivery of new Solutions partnerships).

The 2019 Policy, provides the detailed structure of each element of remuneration and how each element is determined. The remuneration package of the Executive Directors is made up of elements of fixed and variable remuneration. The Remuneration Committee is mindful of the weighting of fixed and variable pay and balance of short- and long-term awards, and sought to position a larger proportion of the remuneration package as equity-based and performance-related in order to support the Company's strategic objectives of high growth and expansion and to create shareholder alignment. The balance of the remuneration of the Executive Directors is set out at"Illustration of 2019 Policy" on pages •• and ••. The deferral and holding periods and the minimum shareholding requirements all help ensure a longer term focus for the business from the Executive Directors.

Base Salary

Reflects the value of the individual, their role, skills, experience (taking into account appropriate market data) and contribution to the business

Benefits

Aligned with all other employee arrangements

Pension

Provides an appropriate level of retirement benefits

Annual Incentive Plan

Incentivises achievement of annual objectives

Deferred Bonus Under AIP

Aligns Director and shareholder interests by delivering bonus payments in deferred shares with a holding period

One-off Plans

Motivates key individuals to achieve long-term targets and exceptional levels of performance

Fixed

Variable

Remuneration Committee Discretion and Judgement

In formulating the 2019 Directors' Remuneration Policy, the Remuneration Committee sought to allow it sufficient operational flexibility over Director remuneration for three years. While the 2019 Policy provides the boundaries for remuneration arrangements, it is intended to provide some isolated discretion for the Remuneration Committee to use in various circumstances relating to particular components of remuneration. The 2019 Policy does not provide for the exercise of discretion over any aspect of the policy. The Remuneration Committee may not use any discretion outside the Policy without separate shareholder approval.

The Remuneration Committee operates the share schemes according to their respective rules and in accordance with the Listing Rules and other rules and regulations, where relevant. The Remuneration Committee retains discretion, in a number of regards, to the operation and administration of these plans. The discretions include, but are not limited to, those set out in the table below.

Area of DiscretionAIPLTIPGIPVCP
The participantsYYYY
The timing of grant of an award or paymentYYYY
The size of an award (up to a predetermined maximum)YYYY
The determination of vesting, holding periods or paymentYYYY
Discretion required when dealing with a change of control or restructuring of the Group including whether awards should be time pro-ratedYYYY
Determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen including whether awards should be time pro-ratedYYYY
Adjustments to terms of awards required in certain corporate circumstances (for example, rights issues, corporate restructuring events and dividends)YYYY
Adjust or change the performance conditions if anything happens which causes the Remuneration Committee reasonably to consider it appropriate (for example, Board approved strategic initiative or transaction) provided that any changed performance condition will be equally difficult to satisfy as the original condition would have been had such circumstances not arisenYYYN
The annual review of performance measures and weighting, and targets from year to yearYYNN
Adjustment to level of payments or formulaic scheme outcomes, both upwards and downwards, including to ensure the scheme outcomes reflect individual or Company performance over the performance period, or to take account of unforeseen circumstances outside the Company's controlYYNY
Application of malus and clawbackYYYY

The use of discretion in relation to the Company's ESOS or 2014 ESOS, Sharesave and Share Incentive Plan will be as permitted under HMRC rules and the other relevant rules and regulations. Any use of the above discretions would, where relevant, be explained in the Directors' Remuneration Report and may, as appropriate, be the subject of consultation with the Company's major shareholders. The Remuneration Committee may also apply judgement or a qualitative assessment, for example in assessing achievement against role-specific objectives under the AIP.

Development of the 2019 Directors' Remuneration Policy

Shareholder Consultation and Views Obtained

In preparing the 2019 Policy, the Company carried out an extensive shareholder consultation exercise with our largest shareholders and representative bodies to seek feedback on the main changes proposed.

The Remuneration Committee was pleased with the support most of our largest shareholders gave to our original proposals, in particular the recognition of the challenges the Remuneration Committee faces in setting Director remuneration at Ocado, and the understanding of our rationale for the main changes proposed. In finalising our proposals, shareholder feedback received to date was carefully considered, in particular the feedback on the proposed one-off VCP.

The Company’s 20 largest shareholders were contacted, representing over 80% of our issued share capital at the time of consultation as well as Glass Lewis, The Investment Association and ISS, to consult on proposed changes to our policy. We carefully considered all feedback, and made some changes to the proposals in response. The following table sets out full details of the Remuneration Committee's rationale for the proposed changes to the current policy, shareholder feedback during the consultation and the final position reached.

Key proposed changeRationale, shareholder feedback and Committee response

Simplification of the current remuneration through the replacement of the LTIP and AIP with a single new AIP

The Remuneration Committee recognises that short-term incentives (albeit with a large portion of deferral) have a greater perceived value to participants as the performance period is shorter meaning there is greater certainty of value sooner compared to the LTIP. For this reason, the proposed annual opportunity has been reduced, with the calculation set out below:

Executive DirectorCurrent AIP
(% of salary)
Current LTIP
(% of salary)
75% of LTIP
(% of salary)
Proposed AIP
(% of salary)
CEO125%200%150%275%
CFO, COO, CEO of Ocado Solutions100%150%112.5%215%
General Counsel100%120%90%190%
  1. Proposed AIP is equal to the current AIP level plus 75% of the LTIP. Rounded for the CFO, COO and CEO of Ocado Solutions.

The Remuneration Committee believes that the best remuneration vehicle to operate alongside the VCP is a new AIP to replace the current AIP and LTIP for the following reasons:

    1. The issues associated with choosing meaningful three-year strategically-aligned performance measures have led some stakeholders to comment that the LTIP is not satisfactory. The commercial sensitivity of long-term targets under the LTIP has prevented the Remuneration Committee from full disclosure about remuneration arrangements to date;
    2. Meaningful and robust one-year annual performance targets can be set under the AIP and can usually be disclosed retrospectively in line with best practice;
    3. Deferred AIP shares vest after three years and are subject to a further two-year holding period. This is in line with the 2018 Code which states that shares should be subject to a five-year vesting/holding period in order to align management's interests with those of shareholders; and
    4. Management will remain incentivised to meet financial and operational targets with the prospect of being remunerated in both cash and deferred shares.

Shareholders supported the simplification of the remuneration structure and commitment to transparency in targets and performance against them. Some commented positively on the operational nature of the AIP measures proposed for 2019. For more details see below.

Introduction of a new one-off VCP

The VCP looks to address a number of challenges the Remuneration Committee faces in setting Director remuneration in Ocado.

The single total shareholder return performance measure of the VCP enables the Remuneration Committee to be fully transparent about targets and performance against them and there is no requirement to adjust the parameters of the VCP once set if the Group strategy implementation shifts.

The plan incentivises significant and sustained growth over both the full performance period and each year of the period, and directly supports the Board's view that the key output of the effective implementation of the Company's strategy is substantial and sustained total shareholder return.

There is a direct alignment between shareholder's and management's interests, with the benefit received by management being proportionate to the return received by shareholders. There is a substantial risk that where performance has been good but not exceptional the Executive Directors will not benefit, but this is balanced by the potential for a higher level of reward when stretching levels of return are achieved. The cap on annual vesting, where the excess is rolled forward and eligible to vest in future years, provides an ongoing locked-in shareholding, which is aligned with shareholders' interests.

During the consultation, many shareholders agreed that the VCP was the appropriate incentive plan for the Company, due to the Company's ambitious management team and the strategic rationale presented. The long-term nature of the plan, direct shareholder alignment, and annual cap on vesting were features particularly supported by shareholders.

In response to shareholder concerns, the Remuneration Committee reduced the proposed potential quantum delivered under the VCP, and, in addition, increased the hurdle rate to ensure the plan delivered value to the Executive Directors only in the case of the achievement of exceptional growth or to take account of such other factors it considers appropriate.

Additional holding periods

Vested shares become unrestricted no earlier than five years from the start of the relevant AIP award and the VCP.

This ensures alignment with the 2018 Code, and further increases the alignment of Director interests with those of the shareholders.

This change was supported by shareholders.

Increase to the minimum shareholding requirement

Increasing the shareholding requirement for the Executive Directors will further link their interests with that of shareholders.

This was supported by shareholders.

Introduction of a post-cessation shareholding requirement

Introducing a post-cessation shareholding requirement for the Executive Directors ensures that they consider effective succession planning and provides an ongoing exposure to the impact of decisions made during their employment through the Company share price of Ocado post-cessation. This is also in line with the 2018 Code requirements.

This was supported by shareholders.

Reduction in maximum Executive Director pension contribution

Although the Executive Directors' pension contributions are currently 8%, the change to the 2019 Policy means that pension contributions for any new appointments to the Board will not exceed 8%, thereby ensuring greater fairness across the Company. This is also in line with the 2018 Code requirements.

This was supported by shareholders.

Statement of Consideration of Employment Conditions Elsewhere in the Company

The 2019 Policy is designed in line with the remuneration principles outlined above. 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, pension and share schemes for all employees in the Group, including the percentage increases in base pay for monthly and hourly paid employees. When making decisions on Executive Remuneration, the Remuneration Committee did not consult with employees when drawing up the 2019 Policy, but referenced a number of factors related to the wider workforce, including the all-employee remuneration report and potential cascade of remuneration framework changes.

The remuneration arrangements for employees below Board level reflect the seniority of the role. The components and levels of remuneration for different employees differ from the remuneration framework for the Executive Directors. The Group operates some tailored bonus and long-term incentive arrangements for certain groups of employees, but has not adopted a universal approach to these elements of remuneration for all employees.

Alignment of proposed 2019 Policy with the requirements under the UK Corporate Governance Code 2018

Under the headings prescribed by the UK Corporate Governance Code 2018, the rationale for the main changes to the 2019 Policy are:

Clarity

2018 Code provision: remuneration arrangements should be transparent and promote effective engagement with shareholders and the workforce

  • The complexity of setting three-year performance targets under the current LTIP along with the commercial sensitivity of much of Ocado’s long-term strategic plans meant that the targets and performance against them were not sufficiently clear to shareholders.
  • The single total shareholder return performance measure of the VCP enables the Remuneration Committee to be fully transparent about targets and performance against them.
  • Under the AIP, it is easier to set meaningful and robust oneyear annual performance targets, which can be fully disclosed retrospectively.

Simplicity

2018 Code provision: remuneration structures should avoid complexity and their rationale and operation should be easy to understand

  • Simple payment mechanism – under the VCP, the Executive Directors receive 2.75% of the value above the hurdle calculated on an annual basis with the shares received at the end of three, four and five years from the start of the VCP period.
  • Simple performance condition – the VCP rewards absolute returns to shareholders.
  • Simplified package – number of plans in operation reduced from three to two with the removal of the LTIP.

Risk

2018 Code provision: remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target-based incentive plans, are identified and mitigated

  • The combination of reward for short-term strategic decisions (paid part in cash and part in deferred shares) and long-term, sustainable shareholder returns ensures Ocado's Director incentives together drive the right behaviours for the Company and shareholders.
  • The caps within the VCP mitigate against excessive reward. There is a cap on the total number of share awards which may vest under the VCP of 2.75% of the issued share capital. The cap on annual vesting (£20 million for the Chief Executive Officer and a proportionate limit for other Executive Directors), where the excess is rolled forward and eligible to vest in future years, means the more successful the growth of the Company, the longer the term of the VCP, leading to substantial long-term shareholder alignment.

  • There is an ability to override formulaic outcomes produced by the performance conditions where in the Remuneration Committee's opinion they do not reflect the true performance of the business over the period, individual performance or where the outcome will not deliver the policy intentions.
  • In addition, malus and clawback provisions are contained in both plans.

Predictability

2018 Code provision: the range of possible values of rewards to individual directors and any other limits or discretions should be identified and explained at the time of approving the policy

  • Payouts under the VCP based on three different share price growth assumptions in the Annual Report on Remuneration - Implementation of Policy for 2019. The award limits and operation of a cap on annual vesting ensure the potential payouts under the VCP are limited both annually and, in terms of number of awards, over the entire life of the VCP.

Proportionality

2018 Code provision: the link between individual awards, the delivery of strategy and the long-term performance of the company should be clear. Outcomes should not reward poor performance

  • Under the VCP, there is a clear and direct link between Company performance and individual rewards. The Executive Directors receive 2.75% of the value created above the threshold hurdle, and nothing if the threshold growth rate is not achieved.
  • The underpin in the VCP operates such that share awards will only vest if Total Shareholder Return is 10% Compound Annual Growth Rate or more and if not achieved at the final vesting date, any unvested share awards will lapse – so there can be no payout for poor performance.

Alignment to Culture

2018 Code provision: incentive schemes should drive behaviours consistent with company purpose, values and strategy

  • The Remuneration Committee is satisfied that the VCP incentivises and retains the highly entrepreneurial Chief Executive Officers and Executive Directors in Ocado.

  • Strategic implementation within Ocado is not linear, with priorities shifting and developing often in the short-term and the Remuneration Committee has worked hard to formulate a Policy and incentive plans that drive exceptional, sustainable growth while also rewarding appropriate short-term strategic decisions.

2019 Directors' Remuneration Policy Table: Elements of Executive Director Remuneration

The following table sets out the key elements of remuneration for the Executive Directors.

Purpose and Link to StrategyHow it OperatesPerformance
Conditions
Maximum
Opportunity
Recovery or
Withholding
Fixed Pay

Base pay

To attract and retain the right calibre of senior executive required to support the long-term interests of the business.

Paid monthly in cash.

Reviewed annually or when there is a change in position or responsibility by the Remuneration Committee, with any changes normally becoming effective in April each year (or may be reviewed ad hoc where there is a significant change of responsibilities).

The review takes into account a number of factors including:

The Group's annual review process;

  • Business performance;
  • Total remuneration;
  • Appropriate market data for comparable roles for companies of equivalent size and complexity in similar sectors and geographical locations to the Company; and
  • An individual's contribution to the Group.

Not performance linked.

To avoid setting the expectations of Executive Directors and other employees, no maximum salary is set under the policy.

Normally, maximum salary increases for Executive Directors will be within the normal percentage range and guidelines that are applied to the UK-based monthly paid employees of the Company in that year.

Where appropriate and necessary, larger increases may be awarded in exceptional circumstances; for example, if a role has increased significantly in scope or complexity.

Larger increases may also be considered appropriate and necessary to bring a recently appointed executive in line with the market and the other executives in the Company where their salary at appointment has been positioned below the market.

No contractual provisions for malus or clawback.

Changes from previous Policy
None.

Benefits

To attract and retain the right calibre of senior executive required to support the long-term interests of the business.

 

Any benefits allowances will be paid in cash monthly and will not form part of pensionable salary.

The Company provides a range of benefits which are aligned with those provided to monthly paid employees under the Company's flexible benefits policy.

Benefits include private medical insurance and health assessments, life assurance, travel insurance, income protection, travel/car allowance, free parking, access to financial and legal advice, staff product discount, subsidised staff restaurants and other discounts.

Any business travel costs will be paid by the Company. Additional benefits or payments in lieu of benefits may also be provided in certain circumstances, if required for business needs.

The Company provides Directors' and Officers' Liability Insurance and may provide an indemnity to the fullest extent permitted by the Companies Act.

 

Not performance linked.

Benefits for Executive Directors are set at a level which the Remuneration Committee considers to be appropriate against market data for comparable roles for companies of equivalent size and complexity in similar sectors and geographical locations to the Company.

The maximum value of the Directors' and Officers' Liability Insurance and the Company's indemnity is the cost at the relevant time.

No contractual provisions for malus or clawback.

Changes from previous Policy

None.

Pension

To attract and retain the right calibre of senior executive required to support the long-term interests of the business.

Contributions, allowances and pension choices for the Executive Directors are on the same terms as for other employees.

Executive Directors can choose to participate in the defined contribution Group personal pension scheme or an occupational money purchase scheme.

Where lifetime or annual pension allowances have been met, the balance of employer contributions may be paid as a cash allowance or into a personal pension arrangement.

Not performance linked.

Contributions to the defined contribution pension scheme for the Executive Directors will normally be in line with the other scheme participants.

Pension contributions for UK based Executive Directors will not exceed 8% of annual base salary, in line with the other scheme participants.

or Executive Directors outside the UK, provision for an executive pension will be set taking into account local market rates.

No contractual provisions for malus or clawback.

Changes from previous Policy

For the defined contribution pension scheme, reduction in maximum pension contribution from 30% of salary up to 8% of salary, to bring this fully in line with the level currently offered to all employees and Executive Directors.

Variable Pay

Annual Incentive Plan ("AIP")

To provide a direct link between measurable and predictable annual Company and/or role specific performance and reward.

To incentivise the achievement of outstanding results aligned to the business strategy.

To support long-term shareholder alignment through deferral into shares and holding periods.

Measures and targets are set annually and bonus payments are determined by the Remuneration Committee following the year end based on performance against the targets.

Up to 50% of any bonus earned will be paid in cash (up to a maximum of 100% of salary) and at least 50% will be deferred into shares.

The main terms of the deferred shares are:

  • Minimum deferral period of three years from the date of grant;
  • Additional two-year post vesting holding period (or such other period as the Remuneration Committee may determine);
  • The Executive Director's continued employment to the end of the deferral period unless he/she is a"good leaver" (see below).

The Remuneration Committee may award dividend equivalents on deferred shares to Executive Directors to the extent that they vest until the end of any relevant post-vesting holding period.

The Remuneration Committee sets annual targets that are closely aligned to the delivery of the Group's strategic objectives for that year.

These will be a mix of financial targets and operational and strategic objectives.

For threshold performance no more than 25% of the maximum opportunity will be earned. For stretch performance, the maximum opportunity will be earned.

Details of the performance conditions, targets and their level of satisfaction for the year being reported on will be set out in the Annual Report on Remuneration.

The Company will set out the nature of the targets and their weighting in the section headed Implementation of Policy for the upcoming year.

The maximum bonus is 275% of salary.

The maximum bonus payable for the relevant financial year for each Executive Director is described in the Annual Report on Remuneration.

Malus and clawback provisions will apply to the AIP.

Malus will apply to the cash payments up to the date of payment of a cash bonus. Malus will apply to the deferred share award for three years (or longer, if the Remuneration Committee determines) from the date of grant of a deferred award.

Clawback will apply to cash payments for three years (or longer, if the Remuneration Committee determines) from the date of payment. Clawback will apply to the deferred share award for two years from the date of vesting.

Read more below.

Changes from previous Policy

  • Simplification of package through replacement of the current LTIP and AIP with a single new AIP, leading to an overall reduction in total annual variable remuneration opportunity.
  • Mandatory deferral of at least 50% of any bonus earned to further support shareholder alignment. Previously, deferral was only required if an Executive Director had yet to meet their shareholding requirement.
  • Additional two-year post-vesting holding period applicable to deferred shares such that the overall time horizon until deferred shares are released is five years, further supporting shareholder alignment and the phasing of payments.
  • Increase in maximum AIP opportunity from 200% of salary to 275% of salary. Overall reduction in total annual variable remuneration opportunity (excluding the one-off plans) given no further grants under the LTIP.

One-off plan: Value Creation Plan ("VCP")

To attract, retain and incentivise senior executives.

To align the interests of senior executives and shareholders, by incentivising senior executives to deliver substantial and sustained total shareholder return over the long term.

A one-off award that grants Executive Directors the opportunity to earn share awards over a five-year performance period with a vesting period of up to ten years.

The award gives Executive Directors the opportunity to share in 2.75% of the total value created for shareholders above a hurdle measured on a date shortly after the end of each year ("Measurement Date") of the five year performance period.

Executive Directors may choose to receive their share awards by acquiring linked jointly owned equity awards at the time that they are invited to join the VCP.

Fifty percent of the cumulative number of share awards will vest following the third and fourth Measurement Dates, with 100% of the cumulative number of the share awards vesting following the fifth Measurement Date. Additional holding periods apply such that vested shares become unrestricted no earlier than the end of the five year performance period.

If the minimum return of 10% p.a. (the"underpin") has not been achieved at the third and fourth Measurement Dates, no share awards will vest at this point but they will not lapse. If the underpin has not been achieved at the fifth Measurement Date, no share awards will vest at this point and the remaining cumulative balance will lapse.

The Remuneration Committee may vary the level of vesting of a share award, if it determines that the formulaic vesting level would not reflect business or personal performance or such other factors as it may consider appropriate.

The starting share price for the beginning of the VCP performance period will be the 30-day average prior to the date of approval of the VCP by shareholders.

The share price used at each Measurement Date shall be the 30-day average following the announcement of the Company's results for the relevant financial year plus the value of any dividends payable in respect of that year.

The maximum number of share awards which may vest under the VCP is 2.75% of the issued share capital.

For the Executive Directors, the following maximum limits apply:

  • CEO: 1% of issued share capital; and
  • Other current Executive Directors: 0.25% of issued share capital each.

Awards are subject to an additional cap on the value on vesting of £20 million in any given year for the CEO and proportionate for other participants (based on their level of participation). Any share awards worth in excess of this cap will be rolled forward and eligible to vest in subsequent years, so long as the cap is not breached in those years, until the VCP is fully paid out or five years after the fifth Measurement Date when any unvested share awards will automatically vest. Rolled forward share awards are not subject to the underpin.

The cap on the value on vesting may lead to share awards vesting over a ten-year period for exceptional performance.

 

Malus and clawback provisions will apply to VCP awards.

Malus will operate throughout the performance periods.

The clawback period will be two years (or longer, if the Remuneration Committee determines) from the date of vesting.

Read more below.

Discretion may be exercised in cases where the Remuneration Committee believes that the outcome is not a fair and accurate reflection of business performance. The exercise of this discretion may result in a downward or upward movement in the amount of the VCP vesting resulting from the application of the performance measure.

Changes from previous Policy

  • A new plan, operating alongside the AIP as the only other incentive plan.
  • Combination of the VCP and AIP aims to ensure the package aligns to Ocado's purpose, values and strategy and supports strong shareholder alignment through a simplified and transparent remuneration package.

Long Term Incentive Plan ("LTIP")

No future awards will be granted to the Executive Directors under the LTIP (subject to shareholder approval of the VCP).

To attract, retain and incentivise senior executives over the longer term.

To align the interests of the senior executives and the shareholders.

An annual award over a fixed number of shares. Awards made in the form of nil-cost options or conditional share awards will ordinarily vest three years from the date of grant, subject to continued service and the achievement of performance conditions and other conditions.

Awards made after 3 May 2017 are subject to an additional holding period of two years (or longer if the Remuneration Committee determines) from the third anniversary of the date of grant. LTIP awards are only acquired by an Executive Director once the total period of five years from the date of grant has elapsed. The holding period usually applies regardless of whether or not the Executive Director remains an employee of the Group.

Dividend equivalents may be paid in cash or additional shares on LTIP awards that vest (and where relevant up to the end of any holding period).

The Remuneration Committee sets targets that are closely aligned to the delivery of the Group's strategic objectives for the performance period. These will be a mix of financial targets and individual objectives with the majority being financial.

For threshold performance, no more than 25% of the maximum opportunity will vest. For stretch performance, the maximum opportunity will be earned.

The measurement period for performance conditions will ordinarily comprise at least three financial years of the Company.

The performance conditions for the relevant award are described in the Annual Report on Remuneration.

The intention is to allow legacy LTIP awards granted prior to 2019 to vest in line with the previous Policy.

The maximum opportunity under the LTIP is 200%.

No future awards will be granted to the Executive Directors under the LTIP.

Malus and clawback provisions will apply to LTIP awards.

Malus will apply over the vesting and holding period.

The clawback period will be two years (or longer, if the Remuneration Committee determines) from the end of the holding period or the date the awards are acquired.

Read more below.

Changes from previous Policy
  • The Remuneration Committee will not make awards under the LTIP to participants in the VCP (subject to shareholder approval of the VCP).

All Employee Share Plans

The table below summarises the All Employee Share Plans operated by the Group, and which the Executive Directors are able to participate in.

Purpose and Link to StrategyHow it OperatesPerformance ConditionsMaximum OpportunityRecovery or Withholding

Sharesave

To provide all employees, including Executive Directors, the opportunity to voluntarily invest in Company shares and be aligned with the interests of shareholders.

All employees, including Executive Directors, are eligible to participate in this all employee tax advantaged share scheme.

The Company grants options over shares in the Company to employees.

To obtain an option an eligible individual must agree to save a fixed monthly amount for three of five years up to the maximum monthly amount under HMRC limits. The amount saved will determine the number of shares over which the option is granted. Options may be exercised in a six-month period at the maturity of a three or five-year savings period, subject to continued service.

Not performance linked.

Options are usually granted at a discount to the market price at the time of grant up to the maximum discount under HMRC limits.

Employees are limited to saving a maximum amount under HMRC limits.

The scheme rules do not provide for malus or clawback provisions.

Changes from previous Policy

None.

Share Incentive Plan ("SIP")

To provide all employees, including Executive Directors, the opportunity to receive and invest in Company shares and be aligned with the interests of shareholders.

All employees are eligible to participate in this all employee share scheme. The SIP allows:

  • The Company to grant free shares to all employees allocated on an equal basis;
  • All employees to buy partnership shares monthly from their gross salary; and
  • The Company may offer matching shares to employees who purchase partnership shares.

Dividend shares are also covered by the SIP arrangements.

Not performance linked.Maximum opportunity for awards and purchases are kept in line with HMRC limits.The scheme rules do not provide for malus or clawback provisions.

Non-Executive Directors

The following table sets out the key elements of remuneration for the Non-Executive Directors.

Purpose and Link to StrategyHow it OperatesPerformance ConditionsMaximum OpportunityRecovery or Withholding

Chairman Fee

To attract and retain an individual with the appropriate degree of expertise and experience.

The fee is paid monthly as a mix of cash and shares, as determined by the Remuneration Committee.

Reviewed annually by the Remuneration Committee, with any changes normally becoming effective in April each year.

The review takes into account a number of factors including: the Group's annual review process, business performance and appropriate market data for comparable roles for companies of equivalent size and complexity in similar sectors and geographical locations to the Company.

Not performance linked.

The maximum aggregate amount of basic fees payable to all Directors shall not exceed the £1 million limit set in the Company's Articles of Association.

Normally, any increases will be within the normal percentage range and guidelines that are applied to the UK-based monthly paid employees of the Company in that year.

No contractual provisions for clawback or malus.

Non-Executive Director Fee

To attract and retain expert people with the appropriate degree of expertise and experience.

The fee is paid monthly in cash.

Fee structure includes an annual base fee for a Non-Executive Director and may include additional fees for being the Senior Independent Director, a Board committee chair or other additional responsibility.

Reviewed annually by the Executive Directors and the Chairman, with any changes normally becoming effective in April each year.

The review takes into account a number of factors including: the Group's annual review process, business performance and appropriate market data for comparable roles for companies of equivalent size and complexity in similar sectors and geographical locations to the Company.

Not performance linked.

The maximum aggregate amount of basic fees payable to all Directors shall not exceed the £1 million limit set in the Company's Articles of Association.

Normally, any increases will be within the normal percentage range and guidelines that are applied to the UK-based monthly paid employees of the Company in that year.

No contractual provisions for clawback or malus.

Travel and expenses

To support the Directors in the fulfilment of their duties.

The Company may reimburse expenses and travel costs reasonably incurred by the Chairman and the Non-Executive Directors in fulfilment of the Company's business, together with any taxes thereon.Not performance linked.The maximum reimbursement is expenses reasonably incurred, together with any taxes thereon.No contractual provisions for clawback or malus.
Other arrangements

The Chairman and the Non-Executive Directors are not usually eligible for annual bonus, share incentive schemes, pensions or other benefits with the exception of the staff product discount and free delivery offered to all employees.

The Company provides the Chairman and the Non-Executive Directors with Directors' and Officers' Liability Insurance and may provide an indemnity to the fullest extent permitted by the Companies Act.

Not applicable.

The maximum staff product discount is that offered to any Group employees.

The maximum value of the Directors' and Officers' Liability Insurance and the Company's indemnity is the cost at the relevant time.

Not applicable.
Purpose and Link to StrategyHow it Operates
Minimum Shareholding requirement
To align Executive Directors and shareholders.
The Remuneration Committee has adopted formal shareholding requirements that will encourage Directors to build up over a five year period and then subsequently hold a shareholding equivalent to a percentage of base salary. Adherence to these guidelines is a condition of continued participation in the equity incentive arrangements for Executive Directors. This policy ensures that the interests of Directors and those of shareholders are closely aligned.
The following table sets out the minimum shareholding requirements:
RoleShareholding Requirement (% salary)
Group Chief Executive Officer400%
Other current Executive Directors300%
Other future Executive Directors300%
ChairmanThe Chairman is expected to hold shares equivalent to one year's annual fee. This holding can be built up over three years from appointment.
Non-Executive DirectorsNon-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.
The Remuneration Committee retains the discretion to increase the shareholding requirements.
In addition, a post-cessation shareholding requirement will apply to Executive Directors who leave the Company. Leavers will have a requirement to hold 100% of their pre-cessation shareholding requirement for 12 months from leaving.
Changes from previous Policy
  • Minimum shareholding requirements increased for all existing Executive Directors from 200% of salary, and post-cessation shareholding requirement introduced.
  • Increased shareholding requirement for existing Executive Directors further supports shareholder alignment, encouraging sustainable share price growth. The higher requirement for existing Executives is fulfilled by the current shareholdings that Directors already hold.
  • Introducing a post-cessation shareholding requirement for Executive Directors will ensure Executive Directors consider effective succession planning and provides an ongoing exposure to the impact of decisions made during their employment through the share price of Ocado post-cessation.

Notes to the Policy Tables

Other than as described in the Policy table, there are no components of the Executive Directors' remuneration that are not subject to performance conditions.

Under a jointly owned equity ("JOE") award the Executive Director acquires shares jointly with the trustee of the Company's Employee Benefit Trust, where the Executive Director has an interest in the growth in value of the jointly owned shares above a hurdle price. The Executive Director may only realise value from the JOE award at the same times and to the same extent as from a linked share award, and any value the Executive Director receives from the JOE award will be offset against the value that the Executive Director may receive under the linked share award. No incremental remuneration arises from the operation of the JOE award.

While the Group has a policy of remunerating its employees through share scheme participation, it does not have formal remuneration arrangements for all employees akin to all of the components of Directors' remuneration.

The Company may make any remuneration payment or payment for loss of office (including exercising any discretion in connection with such payments) notwithstanding that they are not in line with the policy table set out above if the terms of that payment were agreed (i) before the Company's first shareholder-approved directors' remuneration policy came into effect; (ii) before the 2019 Policy came into effect provided that those terms were in line with the directors' remuneration policy in force at the time; or (iii) at a time when the individual was not a Director of the Company and the Remuneration Committee determines that they payment was not in consideration for the individual becoming a Director. For these purposes, payments include awards of variable remuneration and the terms of such a payment are"agreed" when the award is granted.

Malus and Clawback Provisions

The AIP, LTIP, GIP and VCP scheme rules contain malus and/or clawback provisions that allow the Remuneration Committee to reduce or retrieve a payment or an award.

Malus is the adjustment of the AIP payments, unvested AIP deferred shares, unvested LTIP awards, or unvested VCP awards because of the occurrence of one or more circumstances listed below. The adjustment may result in the value being reduced to nil. Clawback is the recovery of cash payments made under the AIP or vested LTIP, deferred AIP and VCP awards as a result of the occurrence of one or more circumstances listed below. Clawback may apply to all or part of an Executive Director's payment under the AIP, LTIP or VCP award and may be effected, among other means, by requiring the transfer of shares, payment of cash or reduction of awards or bonuses.

The Remuneration Committee may apply malus/clawback when there are exceptional circumstances. Such exceptional circumstances include (without limitation):

  • a material mis-statement in the published results of the Group or one of its members;
  • an error in assessing any applicable performance condition or the number of shares subject to an award;
  • misconduct on the part of the Executive Director concerned;
  • where, as a result of an appropriate review of accountability, the Remuneration Committee determines that the Executive Director has caused wholly or in part a material loss for the Group as a result of (i) reckless, negligent or wilful actions or omissions or (ii) inappropriate values or behaviour;
  • where, as a result of an appropriate review of accountability, the Remuneration Committee determines that the Executive Director has caused wholly or in part a corporate failure of the Company;
  • a Group member being censured by a regulatory body; and
  • events or behaviour on the part of the Executive Director leading to significant reputational damage to the Group.

The first four of the above triggers are applicable to the LTIP and GIP, and all seven triggers are applicable to the AIP and the VCP. The following table summarises the application of malus and clawback in respect of the incentive plans.

Annual Incentive Plan (cash)Annual Incentive Plan (deferred shares)LTIPVCPGIP
MalusUp to the date of payment of a cash bonus.Three years from the grant of a deferred award.Over the vesting period.Over the vesting period.Over the vesting period.
ClawbackThree years from the date of payment of a bonus.Two years following the vesting of an award.Two years following the vesting of an award.Two years following the vesting of any share awards.Two years from the end of the vesting period.

Loss of Service or Termination Policy

When considering compensation for loss of office, the Remuneration Committee will always seek to minimise the cost to the Company while applying the following philosophy:

Remuneration elementTreatment on Cessation of Employment
General

Each of the Executive Directors is employed pursuant to a service contract with Ocado Central Services Limited.

An Executive Directors' employment may be terminated by the Company giving to the Executive Director not less than 12 months' notice or by the Executive Director giving to the Company not less than six months' notice. If an Executive Director's service contract is terminated without cause, Ocado Central Services Limited can request that the Executive Director work their notice period, take a period of garden leave or pay an amount in lieu of notice equal to one times their basic salary, benefits and pension for the remainder of their notice period.

The Company's remuneration principles provide that any payments should be reduced in certain circumstances where the Executive Director's loss has been mitigated, for example, where he moves to other employment.

If employment is terminated by the Company, the Remuneration Committee retains a discretion to settle any other amounts reasonably payable to the Executive Director including but not limited to:

  • Legal fees incurred by the Executive Director in connection with the termination of employment and obtaining independent legal advice on a settlement or compromise agreement; and
  • Outplacement and relocation costs for returning the departing Executive Director and his family.

Other than described above, there are no relevant contractual provisions that are, or are proposed to be, contained in any Executive Director service contract that could give rise to remuneration payments or payments for loss of office, but which are not disclosed elsewhere in the 2019 Directors' Remuneration Policy.

The Remuneration Committee generally has discretion to determine the treatment of a leaver, but will be conscious of the remuneration principle that it should not reward poor performance or behaviour.

In addition to the discretion listed below, in each case the Remuneration Committee has the discretion to determine that an Executive Director is a good leaver (see Note 1 at the bottom of the table). It is the Remuneration Committee's intention to only use this discretion in circumstances where appropriate, which will be explained to shareholders.

Remuneration elementTreatment on Cessation of Employment
Good leaverBad leaverDiscretion
AIP – Cash Awards

The Executive Director service contracts do not oblige the Company to pay a bonus if the Executive Director is under notice of termination.

However, under the rules of the AIP, the Executive Director may receive a bonus that the Remuneration Committee determines would otherwise have been payable or granted to him under the rules reduced pro-rata reflecting the proportion of the financial year that has elapsed to the date of cessation.

The award will normally be paid at the usual payment date and may be made in such proportions of cash and shares as the Remuneration Committee may determine.

In the event of death, the award will be determined as soon as reasonably practicable after the date of death and will, unless the Remuneration Committee determines otherwise, be satisfied as a cash payment as soon as reasonably practicable.

No payment of cash bonus for that year.The Remuneration Committee has the following elements of discretion for a good leaver:
  • Determine that an award be made.
  • Determine whether the awards should be reduced pro-rata.
  • Determine the timing of the payment.
AIP – Deferred Share Awards

The Executive Director will normally receive the award at the usual vesting date on the same timetable as if he had not left, subject to Remuneration Committee discretion.

In the event of death, any outstanding deferred shares will vest and be released from any holding periods as soon as reasonably practicable after the date of death.

Lapse of any unvested deferred share awards on the date the Executive Director ceases to be an employee.The Remuneration Committee has the following elements of discretion for a good leaver:
  • Determine that the individual is a good leaver.
  • Determine the timing of the payment.
  • Determine whether the holding period should apply.
VCP

If the Executive Director leaves employment there will be no further Measurement Dates and ability to accrue share awards.

Accrued share awards will vest at the normal vesting and will normally remain subject to the holding period (other than in the event of death).

Any deferred awards (that have previously been rolled forward subject to the cap) will vest on the normal date.

Accrued share awards (other than deferred awards) will lapse on the date of cessation of employment.The Remuneration Committee has the following elements of discretion for a good leaver:
  • Allow a Executive Director to continue to participate in the VCP until the next Measurement Date following his cessation of employment;
  • Reduce pro-rata the award to reflect the period elapsed between the date of the award and the date of cessation; and
  • Determine whether the holding period should apply.
LTIPUnvested LTIP awards will vest on the vesting date but only to the extent that the performance conditions have been satisfied.

Awards will normally be reduced pro-rata to reflect the proportion of the performance period that has elapsed to the date of cessation of employment. The LTIP awards will normally continue to be subject to the post-vesting holding period.

If an Executive Director dies, his LTIP awards will vest on the date of his death and the performance conditions will not apply but the LTIP award will be normally be reduced pro-rata to reflect the proportion of the performance period that has elapsed at the date of death. The post-vesting holding period will not apply to his LTIP awards.

To the extent that an Executive Director who leaves in circumstances other than dismissal for cause or who dies holding vested LTIP options, they may be exercised at any time during the usual exercise period and will otherwise lapse at the end of that period. The post-vesting holding period will normally continue to apply.

Lapse of any unvested LTIP awards. Vested LTIP options will only lapse if the Executive Director is summarily dismissed.The Remuneration Committee has the following elements of discretion:
  • To determine whether or not to pro-rate the number of shares. The Remuneration Committee's normal policy is that it will pro-rate awards for time. It is the Remuneration Committee's intention to use discretion to not pro-rate in circumstances where there is an appropriate business case which will be explained in full to shareholders;
  • To allow the awards to vest earlier (to the extent the performance conditions have been met); and
  • Not to apply the post-vesting holding period to an LTIP award.
GIPSee LTIP above, as the same leaver rules apply (except with respect to holding periods which do not apply to GIP awards).See LTIP above, as the same leaver rules apply (except with respect to holding periods which do not apply to GIP awards).See LTIP above, as the same leaver rules apply (except with respect to holding periods which do not apply to GIP awards).
All-Employee Share PlansLeavers will be treated a set out within the scheme rules.

(1) A good leaver reason is defined as cessation in the following circumstances:

(a) a transfer of the undertaking, or part of the undertaking, in which the Executive Director works to a person which is neither under the control of the sale of the Executive Directors' employing company or business out of the Group;

(b) death; or

(c) any other reason determined at the discretion of the Remuneration Committee.

Cessation of employment in circumstances other than those set out above is deemed a bad leaver reason.

Change of Control Policy

The incentive schemes contain change of control provisions, as set out in the relevant scheme rules. These are summarised in the table below. Executive Director service contracts do not contain any specific provisions relating to a change of control of the business.

If other corporate events occur such as a winding-up of the Company, demerger, special dividend or other event which, in the Remuneration Committee's opinion, may materially affect the value of shares, and the Remuneration Committee determines it would not be appropriate or practicable to adjust awards, the Remuneration Committee may determine that Awards will vest (and be released from any holding periods) on the same basis as for a change of control.

Name of Incentive PlanChange of ControlDiscretion
AIP – Cash AwardsPro-rated for time and performance to the date of the change of control.The Remuneration Committee has discretion to determine otherwise.
AIP – Deferred Share AwardsSubsisting deferred share awards will vest early on a change of control, and any awards subject to a holding period will be released.The Remuneration Committee has discretion to not release the award early and instead roll the award into an equivalent award in the acquiring company.
VCPThere will be a Measurement Date on the change of control and the value of additional share awards will be calculated as at any other Measurement Date.
The share price used to calculate the Total Shareholder Return will be the offer price for the Company.
Accrued share awards will immediately vest (and be released from any holding periods) on the date of the change of control.
The Remuneration Committee has discretion to not release the award early and instead roll the award into an equivalent award in the acquiring company.
LTIP

The number of shares subject to subsisting LTIP awards will vest on a change of control, subject to the following:

  • The extent that the performance and other conditions have been satisfied at that time; and
  • Unless the Remuneration Committee determines otherwise, pro-rating to reflect the proportion of the normal performance period that has elapsed at the date of that event.

The Remuneration Committee has discretion regarding whether to pro-rate the LTIP awards for time. The Remuneration Committee's normal policy is that it will pro-rate the LTIP awards for time. It is the Remuneration Committee's intention to use its discretion to not pro-rate in circumstances only where appropriate which will be explained in full to shareholders.

The RemunerationCommittee may also, in its discretion, determine that the post-vesting holding period will no longer apply to an LTIP award or to any part of it as of the vesting date or on such later date as decided by the Remuneration Committee.

GIPOptions may be exercised early subject to the performance target being satisfied, and unless the Remuneration Committee determines otherwise, in proportion to the amount of the performance period that has elapsed.

The Remuneration Committee has discretion regarding whether to pro-rate the GIP awards to time. The Remuneration Committee's normal policy is that it will pro-rate the GIP awards for time. It is the Remuneration Committee's intention to use its discretion to not pro-rate if it is deemed inappropriate in the particular circumstances.

The Remuneration Committee has discretion to not release the award early and instead roll the award into an equivalent award in the acquiring company.

Recruitment Policy

The Remuneration Committee will seek to align the remuneration package of a newly appointed Executive Director with the directors' remuneration policy that is in force at the time of appointment. However, the Remuneration Committee retains the discretion to include any other remuneration component or award in the remuneration package which it considers to be appropriate.

In determining the remuneration arrangements for a new Executive Director, the Remuneration Committee will take into account all relevant factors including (but not limited to) the specific circumstances, the calibre of the individual, the market practice for the candidate's location, the nature of the role they are being recruited to fulfil and any relevant market factors, including any competing offers the candidate may be considering. The Remuneration Committee is at all times conscious of the need to pay no more than is necessary.

Where promotion to an Executive Director role is from within the Company, prevailing elements of the remuneration package for an existing employee would be honoured and form part of the ongoing remuneration of the person concerned, provided such element (if not otherwise within the terms of this Policy) was not made in contemplation of such person becoming an Executive Director.

The Company's detailed policy when setting remuneration for the appointment of new Executive Directors is summarised in the table below:-

Remuneration elementRecruitment Policy
Salary, Benefits and PensionSalary, benefits and pension will be set in line with the 2019 Policy for existing Executive Directors.
AIPMaximum annual participation will be set in line with the 2019 Policy and will not exceed 275% of salary.
VCP

The Plan will allow for grants to new joiners as approved by the Remuneration Committee. The new Executive Director's share may be reduced to reflect the time elapsed from the grant of the initial awards, and the date of joining.

The hurdle will remain unchanged and the starting price will be set at a minimum at the starting price for other Executive Directors.

All awards limits and caps, as set out in the 2019 Policy, will apply to any new joiner.

LTIPNo LTIP awards will be granted to new recruits in line with the operation of the 2019 Policy.
"Buy-Out" of incentives forfeited on cessation of employmentTo facilitate recruitment, the Remuneration Committee may, to the extent permitted by relevant plan rules or Listing Rules, make a one-off award to"buy-out" incentives or any other compensation arrangements forfeited by the appointee on leaving a previous employer.
In doing so the Remuneration Committee will ensure that any such awards offered should be on a comparable basis, taking into account all relevant factors including:
  • any performance conditions;
  • the likelihood of those conditions being met;
  • the proportion of the vesting or performance period remaining; and
  • the form of the award.

In determining whether it is appropriate to use such judgement, the Remuneration Committee will ensure that any awards made are in the best interests of both the Company and its shareholders.

Relocation Policies

In instances where the new Executive Director is required to relocate or spend significant time away from their normal residence, the Company may provide one-off compensation to reflect the cost of relocation for the Executive Director.

However, these payments must reflect actual financial loss or cost of moving the Executive Director, their family or assets, and the market practice in the geographical location to which the Executive Director is moving to or from.

The Company may provide relocation costs by funding services or a cash payment or a combination of both.

Recruitment of Non-Executive Directors

The remuneration package for newly appointed Non-Executive Directors will be in line with the structure set out in the remuneration policy table for Non-Executive Directors.

Illustration of 2019 Directors' Remuneration Policy

The charts below provide estimates of the potential future reward opportunity for each of the Executive Directors based on the 2019 Policy outlined in the Directors' Remuneration Report.

Tim Steiner, Chief Executive Officer (£m)

Tim Steiner

Salary and benefits

Pension

AIP

VCP


Duncan Tatton-Brown, Chief Financial Officer (£m)

Duncan Tatton Brown

Salary and benefits

Pension

AIP

VCP


Mark Richardson, Chief Operations Officer (£m)

Mark Richardson

Salary and benefits

Pension

AIP

VCP


Neill Abrams, Group General Counsel and Company Secretary (£m)

Neil Abrams

Salary and benefits

Pension

AIP

VCP


Luke Jensen, CEO, Ocado Solutions (£m)

Luke Jensen

Salary and benefits

Pension

AIP

VCP

The table below sets out the assumptions used to calculate the elements of remuneration for each of the scenarios.

AIPVCPBase salary, Benefits and Pension
MinimumPerformance is below threshold on each metric – no annual variablePerformance is below threshold on each metric – no multiple year variableFixed – included
Target or at ExpectationPerformance is in line with the Company's expectations – 50% of maximum bonusPerformance is in line with the Company's expectations – 50% of the average annual initial estimate of the accounting cost of awardFixed – included
MaximumMaximum performance is achieved on each metric – 100% of maximum bonusMaximum performance is achieved – 100% of the average annual initial estimate of the accounting cost of awardFixed – included
  1. Maximum bonus under the AIP is 275% of salary for the Chief Executive Officer, 190% for the Group General Counsel and Company Secretary and 215% for all other Executive Directors.
  2. The VCP is a one-off award with a performance period of five years and a minimum release period of five years. The maximum value represents 100% of the average annual initial estimate of the accounting cost of the award, which is intended to give an estimate of the value of the award on grant. The target value represents 50% of the average annual initial estimate of the accounting cost of the award. For this illustration, the average annual value has been calculated by dividing the total initial estimate of the accounting cost of the award by five.

The figures use the 2018 base salary, benefits received in 2018 and pension is 8% of base salary. The performance related pay figures are based on the proposed awards for 2019, subject to the approval of the 2019 Directors' Remuneration Policy at the 2019 AGM.

The Company is aware of the revised regulations requiring the maximum scenario in the above charts to reflect Company share price appreciation of 50% during the relevant performance period for performance targets or measures relating to more than one financial year (i.e. Ocado's VCP). [WORDING TO BE CONFIRMED ON FINAL VCP PARAMETERS] For the proposed VCP a share price appreciation of 50% over five years would result in a payout which is less than the payout shown in the target scenario above. As such, we have omitted the 50% share price growth scenario. In addition, dividend equivalents have not been added to the AIP or VCP share awards. ]

Basis of Preparation and Audit

This report is a Directors' Remuneration Report for the 52 weeks ended 2 December 2018, prepared for the purposes of satisfying section 420(1) and section 421(2A) of the Companies Act. It has been drawn up in accordance with the Companies Act and the Code, the Regulations and the Listing Rules.

In accordance with section 497 of the Companies Act and the Regulations, certain parts of this Directors' Remuneration Report (where indicated) have been audited by the Company's auditor, Deloitte LLP.

A copy of this Directors' Remuneration Report will be available on the Company's corporate website.

This Directors' Remuneration Report is approved by the Board and signed on its behalf by:

Andrew Harrison
Remuneration Committee Chairman Ocado Group plc
5 February 2019