This section of the Directors' Remuneration Report describes the membership of the Remuneration Committee, its advisers and principal activities during the period. It forms part of the Annual Report on Remuneration section of the Directors' Remuneration Report.
The current membership of the Remuneration Committee, together with appointment dates, is set out below.
As required under the terms of reference, the Remuneration Committee has three members, all of whom are independent Non-Executive Directors, and holds a minimum of two meetings a year.
Remuneration Committee member since 3 October 2011
Number of meetings: 4
Number attended: 4
Remuneration Committee member since 9 March 2010
Number of meetings: 4
Number attended: 4
Remuneration Committee member since 1 March 2016
Number of meetings: 4
Number attended: 3*
* Andrew Harrison did not attend one Remuneration Committee meeting due to family illness.
The biography of each member of the Remuneration Committee is set out in the Directors' Report.
Other attendees at the Remuneration Committee meetings included the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the People Director and the external adviser to the Remuneration Committee. The Chairman and the Executive Directors and other attendees are not involved in any decisions of the Remuneration Committee and are not present at any discussions regarding their own remuneration. The Deputy Company Secretary is secretary to the Remuneration Committee.
During the period, the Remuneration Committee and the Company retained independent external advisers to assist them on various aspects of the Company's remuneration and share schemes as set out below:
|Adviser||Retained by||Services Provided to the |
|Other Services Provided|
|PricewaterhouseCoopers LLP||Remuneration Committee||Executive remuneration advice including assisting in a benchmarking review of Executive Director remuneration. Appointment effective from June 2017.||Advice on a range of remuneration issues.|
Separate auditor team engaged until May 2017.
Separate teams engaged by the Company to advise on IT security and other matters.
|Deloitte LLP||Remuneration Committee||Executive remuneration advice. Appointment effective until March 2017.||Advice on a range of remuneration issues.|
Separate team engaged in 2017 as statutory auditor to the Company.
|Slaughter and May||Company||None||Share schemes, tax and employment law advice as well as general UK legal advice in respect of a number of the Company's remuneration matters.|
PricewaterhouseCoopers LLP Appointment
Given the appointment of Deloitte LLP ("Deloitte") as external auditors of the Company from the 2017 annual general meeting, it was agreed that Deloitte would not continue as adviser to the Remuneration Committee. Accordingly, the Remuneration Committee tendered the role of independent external adviser. The tender concluded in spring 2017 and PricewaterhouseCoopers LLP ("PwC") were appointed to the role.
The Remuneration Committee approved and oversaw the tender process, including agreeing the timetable and tender document.
The Company met with a number of consultants. From this, two shortlisted firms were invited to submit a written proposal to the Company and to give a presentation to the Remuneration Committee along with a number of key Ocado employees. The Remuneration Committee evaluated each firm using the tender criteria and agreed to appoint PwC. The decision of the Remuneration Committee to appoint PwC as remuneration adviser was based on a number of factors, including the strength of their proposal for services; their understanding of the business and its entrepreneurial culture; an assessment of their independence from the Company; their client base; and their proposed fees. PwC operates under the Remuneration Consultants Group Code of Conduct.
For the period from their appointment on 22 June 2017 to the period end, £17,000 in advisory fees were paid or payable to PwC for services provided to the Remuneration Committee. For the period from the start of the period to their resignation in March 2017, £20,600 in advisory fees were paid or payable to Deloitte LLP for services provided to the Remuneration Committee. Both PwC and Deloitte LLP were paid fees on a retainer basis.
Other Support for the Remuneration Committee
In addition to the external advice received, the Remuneration Committee consulted and received reports from the Company's Chief Executive Officer, the Chief Financial Officer, the Chairman, the People Director and the Deputy Company Secretary. The Remuneration Committee is mindful of the need to recognise and manage conflicts of interest when receiving views and reports from, or consulting with, the Executive Directors or members of senior management.
Principal Activities of the Remuneration Committee During the Financial Year
The Remuneration Committee has, under its terms of reference, been delegated responsibility for setting remuneration for all of the Executive Directors, the Chairman and the Company Secretary. This is outlined in the Statement of Corporate Governance. In line with its terms of reference, the Remuneration Committee's work during the period included the following:
- approving the 2016 Directors' Remuneration Report;
- reviewing performance under the 2016 AIP and consideration of any bonuses payable;
- approving the 2017 AIP performance targets;
- approving the 2017 LTIP awards and performance targets;
- reviewing performance against LTIP awards;
- receiving executive remuneration advice from advisers in respect of a range of matters considered by the Remuneration Committee during the year;
- receiving a report on Group-wide and management remuneration for 2017;
- consulting the Chief Executive Officer and the Chairman on performance and remuneration of the Executive Directors;
- receiving reports from advisers on senior executive pay, market themes and trends;
- receiving a report on the Group's share schemes and plans for 2018;
- receiving a report on shareholder feedback on the 2016 annual report and 2017 annual general meeting;
- reviewing the performance of advisers; and
- agreeing a process and timetable for, and conducting a tender of, the role of external remuneration consultants.
The Remuneration Committee's work also included monitoring and considering the level and structure of remuneration for the Management Committee. Ultimate decision-making responsibility for the remuneration of the Management Committee lies with the Chief Executive Officer. This approach still gives the Remuneration Committee necessary visibility of senior management remuneration to enable it to formulate appropriate policy and make decisions regarding Executive Director remuneration, but allows the Chief Executive Officer, who is best placed to make remuneration decisions about the management team, the flexibility to do so. The Remuneration Committee believes this practice is beneficial to the Company and supports the Code principle D.2.
The Remuneration Committee carried out a review of its terms of reference during the period, which did not result in any changes.
In addition to the activities of the Remuneration Committee, the Executive Directors and the Chairman reviewed the remuneration arrangements of the Non-Executive Directors.