Ocado has admitted that its board of directors will not comply with the UK Corporate Governance Code that regulates best practice when it floats on the stock market.
According to the Telegraph, the code recommends that at least half the board of directors of a UK listed company, excluding the chairman, should comprise of non-executive directors who are deemed by the company to be “independent in character and judgment and free from relationships or circumstances which may affect, or could appear to affect, the director’s judgement”.
However, on page 254 of Ocado’s prospectus, it says that only three of its eight non-executive directors are deemed independent as defined in the code. It says: “The company will therefore not comply with the relevant requirements of the code in relation to the balance of executive and independent non-executive directors.”
It said that under the code’s definition, only chairman Michael Grade and non-executives David Grigson and Ruth Anderson can be deemed independent on its 12-man board. However, Ocado goes on to say that non-executives Robert Gorrie, Jorn Rausing and David Young are considered independent by its board, even though they are not deemed independent for the purposes of the code.
With these three, the number of non-chairman independent directors – five – falls short of the 50% threshold that the code requires.
Ocado said it planned to appoint at least one more independent non-executive in the six months following its flotation. In a statement, it told the paper: “We recognise that we don’t comply with the code but we’ve made strides in bringing non-execs on board and will continue to do so.”
Ocado this week started its investor roadshow in a bid to drum up support for its £1bn IPO.