Tim Steiner Ocado CEO

Ocado (OCDO) executives were awarded a bumper £19.6m pay package last year thanks to the online grocer’s share price gains.

CEO Tim Steiner’s total remuneration for the year, in which the group finally made an annual profit, was up from £1m in 2013 to £6.5m last year, Ocado’s annual report revealed. He stands to gain the most from the online retailer’s Joint Share Ownership Scheme (JSOS), with share price-related gains of £5.5m on top of £944k in take-home pay.

Put in place prior to the July 2010 flotation, the four-year JSOS share scheme was designed to align management’s interests with that of shareholders and keep the team in place long term. Shares bought by each board member only gained value if the share price exceeded the ‘hurdle rate’ on the vesting date each year.

Ocado’s stock fell way short of the target price of 191p and 208p in 2012 and 2013 - meaning no gains under the scheme have been registered for the past two years. However, for the fourth and final tranche, which vested on 1 January 2014, the company’s shares were 219p above the 228p hurdle.

The five beneficiaries of the scheme have yet to cash out, but stood to gain £16.9m at the vesting date – this will rise or fall depending on the movements of the share price and when the directors decide to realise the investment.

Bonus payments fall

Total remuneration for the year to 30 November paid to the five executive directors, excluding amounts attributable to JSOS, was 21% lower than in 2013 at £2.7m despite pay rises for the whole team as bonuses fell by £794k to £912k.

Bonuses paid out under the annual incentive plan fell as gross sales of £1.03bn and EBITDA of £71.6m came in above the “threshold” set but failed to hit the top amount which would have triggered a higher payout. Steiner’s bonus fell from £528k to £385k, FD Duncan Tatton-Brown’s came down from £307k to £184k, operations director Mark Richardson’s fell from £307k to £187k and company secretary Neill Abrams’ dropped from £257k to £156k.

Individual objectives included developing strategic plans for the internationalisation of the business, with the group stating they were confident of signing an agreement with a global partner in 2015.

Steiner achieved 56% of his objectives against a possible payout of 125% of his salary.

He also saw the biggest bump in his base pay – up by £100k or 22% to £550k – as the complexity and scale of the business changed after the Morrisons tie-up. The rest of the board bagged a £10k rise (around 3%), which the annual report said was in line with percentage salary increases for the rest of Ocado’s workforce.

Steiner owns a total of almost 29 million Ocado shares, making his stake worth £112m (at the current price of 391p a share).

Sir Stuart Rose, who chairs the group, was paid £200k in fees, up from £118k in 2013.

Last week Ocado posted its first annual profit since it started operating 15 years ago as full-year revenue jumped by almost 20% compared with 2013.

The group said adjusted profit, before impairments, exceptional items and tax, for the 12 months ended 30 November 2014 was £10.1m, up from a loss of £3.8m a year earlier.