Boohoo is adopting a new “growth plan” which could earn its senior team £107.5m providing they hit targets.
The Manchester online fashion retailer has made the announcement as it ditches its existing Growth Share Plan and Management Incentive Plans.
This morning it said that due to the “unique and unprecedented set of macro-economic and market headwinds experienced over the last three years” its market capitalisation had “significantly decreased.”
This meant there was “little or no value” in its existing plans.
Instead the new Growth Plan will be based on creating shareholder value and to “drive long-term sustainable growth” and retain and motivate its staff.
It stated that the awards would be divided into 5 segments or “tranches”, each subject to a performance condition based on a 90-day average share price.
To achieve all of these “price hurdles” Boohoo’s market capitalisation will have to reach a minimum of £5bn, increaasing its share price by 747%.
If all the awards are hit, £175m in bonuses would be handed out to employees.
Most notably:
CEO, John Lyttle – £50m.
CFO, Shaun McCabe – £25m
Co-founder and Executive Director, Carol Kane – £20m (she will not be taking any award from tranche 1 or 2)
Samir Kamani £12.5m.
“The boohoo group has an outstanding executive team whose ongoing retention is crucial, particularly in an era where the recruitment of such quality is more competitive than ever before,” said Iain McDonald, Chairman of the Remuneration Committee.
“This plan facilitates retention and resolutely aligns our executives’ interests with those of shareholders. In designing the plan, we recognised it needed to go deeper into the business than prior schemes while leaving headroom to attract the world-class talent that is essential to the execution of our strategy and growth ambitions. This is why the plan extends beyond the executive to include additional members of the senior leadership and indeed the wider employee population while acting as a powerful recruitment and incentivisation tool for new joiners.”
The plan is subject to shareholder approval.
“I wholeheartedly endorse the Remuneration Committee’s proposed Growth Plan, designed to rebuild very substantial shareholder value within the next five years,” added Mahmud Kamani, Executive Chairman of boohoo.
“While these are extremely ambitious targets in a changed world, in my view as Executive Chairman and the Company’s largest shareholder it’s absolutely the right thing to do to align the interests of the management team and all of our hardworking colleagues with those of all of our shareholders.”
