Shareholders signal disapproval of boohoo’s £175m growth plan
A sumptuous share rewards scheme for boohoo management has been approved – but with a sizeable chunk of shareholders voting against it to voice their disapproval.
Last month the Manchester online fashion retailer announced it intended to ditch its existing incentive plan and replace it with a five-stage scheme to reward its key executives if the share price hits ambitious targets.
To achieve the full £175m rewards to be paid out in boohoo shares, the company will have to achieve a £5bn market capitalisation and an average share price of £3.95.
The closing price of boohoo shares yesterday afternoon (March 8) was 54.60p per share, giving it a market capitalisation of £692.56m.
In June 2020 boohoo’s shares peaked at 412p, but billions of pounds were wiped off the group’s value later that year when it was linked to claims of ‘sweatshops’ in Leicester, which it responded to by launching a thorough review of its procurement procedures.
Yesterday, a general meeting approved the new rewards scheme, but 37.39% of shareholders opposed the plan.
A boohoo statement said: “The remuneration committee will reflect on feedback gathered throughout the consultation process regarding the growth plan, and will continue to engage with shareholders with regard to the group’s remuneration policy to ensure that shareholder views are considered.”
Iain McDonald, remuneration committee chairman, said: “The growth plan was designed with an intention to rebuild substantial shareholder value through the delivery of extremely ambitious targets, and it acts as a powerful retention, recruitment and incentivisation tool for all participants, resolutely aligning their interests with those of our shareholders.
“We followed a detailed consultation exercise with a number of our larger shareholders and we thank all of them very much for their engagement and contributions.”
Mahmud Kamani, executive chairman of boohoo, said: “As boohoo’s largest shareholder I wholeheartedly endorsed the growth plan, recognising the importance of aligning the interests of all shareholders with those of our hardworking boohoo colleagues.
“The value generated for shareholders would be some 25 times greater than the maximum award of the plan, and I am therefore pleased that it is being implemented.”
Under the terms of the growth plan senior management could qualify for multimillion-pound pay-outs, including £50m for chief executive John Lyttle, £25m for chief financial officer, Shaun McCabe, and £20m for executive director and co-founder Carol Kane.