This article first appeared as part of the Boardroom Sensemaker newsletter – The Observer’s weekly newsletter for the board chairs, directors and executives in charge of Britain’s biggest businesses. To receive it in your inbox, featuring content exclusive to the newsletter, sign up here.
Ocado’s chief executive officer and founder Tim Steiner will remain in post until the start of the 2028 financial year, after a boardroom plot to abruptly oust him backfired.
So what? Despite Steiner’s ambition to build the “Tesla of grocery”, he doesn’t command the same control of his company or loyalty with investors as Elon Musk, and has agreed to step back as a “founder advisor” in 2029 after nearly three decades at the helm.
What happened? In late June Adam Warby, Ocado’s chair, and Jörn Rausing, a key shareholder, board member and billionaire member of the family that own Tetra Pak, led an effort to remove Steiner as the stock price slumped to a decade low and several top ten shareholders sent letters to the board calling for his dismissal. Sky News reported that Warby had already lined up a successor in the form of Niklas Heuveldop, the chief executive of Vonage, a Swedish telecoms brand.
But… not everyone went along with the ambush. One top-ten shareholder claiming to represent investors holding a quarter of the FTSE 250 company’s shares last week wrote to the board calling for the removal of Warby as chairman instead, according to the FT. Long-term investors – notably including Nicholas Roditi, the media-shy former hedge fund manager for George Soros – backed Steiner as the best person to steer the company and secure new deals.
Other investors, of unknown allegiance, include:
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Lingotto Investment, a fund backed by the Agnelli family and managed by renowned tech investor James Anderson;
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Baillie Gifford, which halved its voting stake to 4.47% in April; and
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The Kroger Company, Ocado’s lead technology partner in the US;
The founder premium. Ocado’s business model, which involves licensing robotics and AI to grocers as well as pure delivery, is technical, complex and largely relationship-driven, making an invested founder arguably the best person to lead. But recently Steiner, who has received cumulative payouts of £94m from the company since 2010, was having mixed success.
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Kroger. After signing a deal to build 20 automated warehouses with Ocado in 2018, the US retailer decided earlier this year to shut down three facilities and pull out of a fourth. This precipitated job cuts and a slide in Ocado’s share price, which is close to 90% down from its peak in 2020.
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M&S. In the UK, Ocado is locked in a £190m legal dispute with Marks & Spencer, its retail joint-venture partner, over the final instalment of M&S’s 2019 deal to buy half its UK business.
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Asda. A new deal in May this year to licence Ocado technology to Asda (but not use its robots or retail arm Ocado.com) is a less risky and capital intensive project that could be a bright spot for Steiner and, depending on the financial fortunes of both companies, his successor.
Making succession successful. It’s the job of a chair to make calls that founders won’t. But without canvassing sufficient support of shareholders, running an ouster and lining up a successor is fruitless. The chair of JD Sports Andy Higginson made a similar error earlier this year when he moved against the firm’s CEO and ended up being the one pushed out.
What’s more… Ocado reports half-year results on the 16 July. Will Warby and Steiner be able to put this all behind them by then? Neither appears to have gained much from the saga, but both parties are now stressing their “collaborative” talks. “The board is grateful for Tim’s continued leadership and looks forward to working alongside him throughout this next chapter of Ocado’s development,” the company said on Monday.
Photograph Bloomberg/Getty Images
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