Boohoo backtracks on bonus plan – but analyst asks ‘what was it thinking in the first place?’
Fast fashion empire Boohoo has staved off a shareholder revolt by withdrawing its bonus scheme which was to have been approved by shareholders at June’s annual general meeting.
The bonuses of £1m in cash and shares were approved by the remuneration committee for founder Mahmud Kamani and Carol Kane, and chief executive John Lyttle, despite them having missed their actual targets.
In a statement to the stock market this afternoon, 28 May 2024, the company said it had “decided not to implement the incentive plan at this time” after it had “engaged with certain shareholders”.
On 8 May 2024 the company posted disappointing results which it blamed on rising inflation and the cost-of-living crisis.
But while external factors clearly took their toll on Manchester online fashion retailer the operational targets have been missed by the company’s leadership team as it suffered deeper losses for the year to February 29, 2024.
Dan Coatsworth, investment analyst at AJ Bell: “Boohoo has retreated with its tail between its legs after being publicly shamed over plans to reward founders Carol Kane and Mahmud Kamani and CEO John Lyttle with sizeable bonuses despite the business racking up losses in the 12-month period to February 2024.
“What was it thinking in the first place? The idea of doling out the cash to line the pockets of the bigwigs when Boohoo has gone into reverse with earnings is madness. The whole point of bonuses is that senior managers and directors share the gain when things are going well and share the pain when they aren’t. The heads you win, tails you win mentality no longer cuts the mustard.”
The business also finished the year with a £95m deficit in net cash, compared with a £5.9m surplus the previous year, due to capital expenditure.
During the year the group had invested £64.8m in the automation of its Sheffield distribution hub, and growth in its US division.
Shares in the group have traded in the 30p upwards range all year. They closed at 34.22p per share last night.
The 52-week high is 47.05p per share, while it’s low has been 27.77p.
