Well, one week after Justin King’s resignation, the dashing Jason Gissing has announced plans to move on from Ocado. And if the media coverage pales, there’s no doubt who’s made the most money - for himself, especially.
Gissing sold a £15m stake on Tuesday, when he announced his decision to stand down, on top of the £3.3m he took out last August. His remaining 2.56% stake is worth a further £80m - a nice return for a business that, 14 years after he co-founded the online retailer with fellow investment banker Tim Steiner, has yet to make a pre-tax profit. We calculate it’s invested £486m in capex and made pre-tax losses of £368m.
“Fair play to Jason Gissing. He’s not as famous as Justin King. But he’s a lot richer, and his achievement is not to be sniffed at”
Adam Leyland, Editor
Compare and contrast. Over his 10-year reign, in which Sainsbury’s has made a collective £5bn in pre-tax profits, King has been handsomely rewarded. Last year he took home £4.3m and cashed in £3m in shares, while retaining shares worth £4.5m. He’s also set to benefit from further deferred share and LTIP-based awards linked to his contribution and the future performance of Sainsbury’s.
But a King’s ransom it is not: his net wealth is dwarfed by Gissing’s, despite shareholder returns increasing by 135% (better than either Tesco or Morrisons).
The disparity reflects Sainsbury’s positioning as a retail stock (with the City viewing unkindly the relatively measly return on King’s £8.95bn capex investment) whereas Gissing’s Ocado is a tech stock (which the City obviously loves).
The fortune amassed by Gissing will no doubt rankle with some (including JLP executives, I shouldn’t doubt: despite making an estimated £220m from the sale of its shares three years ago, it knows a) it could have made double that and b) though the proceeds went into paying down the JLP pension deficit, it has spent a sizeable amount in capex competing unprofitably against Ocado). But I say fair play to Gissing. While King has been a superb steward of the 145-year-old Sainsbury’s, Gissing and co-founder Tim Steiner have overcome massive technical and funding issues to create a £3.2bn business. In a 10th of the time.
