Flushed with success of Morrisons tie-up, Ocado doubles CEO's pay to £1m

 

Click to follow
The Independent Online

Ocado's chief executive and founder, Tim Steiner, doubled his pay last year to £1m despite the online grocery business still failing to turn a profit 14 years after it was founded.

The board decided to boost his basic salary by 19 per cent to £417,000 a year, while warehouse staff and delivery drivers saw their pay rise by only 2.6 per cent. Mr Steiner's rise was due in part to the successful tie-up with Morrisons, and also saw his annual bonus jump from £104,000 to £528,000.

His co-founder Jason Gissing, who stepped down from the business last month, took home £608,000 last year, up from £330,000 in 2012, while every other board member saw their pay at least double.

The pay rises came as Ocado said it had made £9m from the first three months of its deal with Morrisons and that the link-up with the supermarket giant was on track.

The company said sales jumped 23 per cent to £228m in the 12 weeks to 23 February, putting it on course to finally make a profit next year. Of the total, £9m was attributed to the Morrisons deal, although Duncan Tatton-Brown, finance director, said that figure was a combination of both sales and fees taken by Ocado.

He said: "It is for Morrisons to give further details on how its online business is going, and I'm sure they'll give plenty of information tomorrow. But it has all been highly successful and we've had no complaints."

Morrisons reports its full-year results today and is expected to reveal that pre-tax profits slumped as much as 20 per cent following a dreadful Christmas, with cash-strapped customers deserting in droves for the likes of the discount chains Aldi and Lidl.

The supermarket will also update shoppers on the rollout of its online business, which is expected to hit London in the summer after launching in Warwickshire and parts of Yorkshire.

Mr Tatton-Brown also revealed that Ocado had reduced the price of its own-brand milk to £1 for four pints, in line with Tesco, Asda, Sainsbury's and Morrisons, but declined to reveal whether suppliers had been asked to foot some of the bill.

He said: "I can't go into the details of our relationships with our suppliers, but obviously if the price falls we work closely with our suppliers to make sure all sides are happy."

Sources close to Ocado said the board pay rises were an attempt to bring them into line with other FTSE 350 companies, and pointed out the strong sales growth and impressive market value.

Not everyone in the City was convinced of Ocado's achievements. Clive Black, a retail analyst at Shore Capital said he thought the business model was a "total failure" at generating profits. He warned: "We remain convinced that this model will not work and that in time there is a greater likelihood than not that both Waitrose and Morrison's will walk away from Ocado."

Mr Tatton-Brown said: "For a start, the Morrisons deal is for 25 years, so that relationship won't end until I've long left the business."

Comments