Boohoo confirms executive bonuses to be linked to ESG targets
Boohoo Group has bowed to demands from MPs to link its executive bonuses to Environmental, Social and Governance (ESG) goals.
Last month the online fashion group received a letter from Philip Dunne, MP and chair of Parliament’s Environmental Audit Committee, in which he suggested the move.
Today the group has confirmed in its annual report that it has accepted Dunne's recommendation as it seeks to move on from last year's accusations of mistreatment of staff at some suppliers in Leicester.
Boohoo has taken multiple steps to clean up its supply chain and reputations since the allegations were unveiled by The Sunday Times at the height of the first wave of the pandemic in the UK.
It conducted an immediate independent investigation into he matter, carried out by Alison Levitt QC, deselected 400 suppliers and appointed Sir Brian Leveson to hold the group accountable to its "Agenda for Change".
The letter from Dunne followed on from Boohoo's co-founder and executive chairman Mahmud Kamani appearing before MPs last December to explain what steps the group had made to improve conditions for workers in its supply chain.
Upon receipt of the letter, Kamani said the group was considering the move, and in its annual report it now says: "Whilst we ultimately believe that the full resolution (or otherwise) of these (supply chain) issues will be reflected in long-term share price performance (and thus have an impact on the value of awards) we have also agreed with participants to add a new non-financial performance condition."
Boohoo's management is heavily incentivised to grow the group at speed. In June of last year, the group announced a £150m incentive plan based on Boohoo achieving a share price of 600p (shares currently stand at 319.4p), with Mahmud Kamani, co-founder Carol Kane, CFO Neil Catto and Samir Kamani (son of Mahmud and CEO of BoohooMAN) all set to benefit. Boohoo Group CEO John Lyttle is part of a separate bonus scheme.
The group has grown rapidly during the pandemic, picking up the brands and websites of Oasis and Warehouse at the beginning of the pandemic, before going on to acquire the brands and websites of Debenhams and former Arcadia brands Wallis, Burton and Dorothy Perkins.
Its annual report also reveals that total executive pay had slipped as Boohoo CEO John Lyttle secured a lower pay packet for the past financial year.
It said that the total pay packet for executive directors fell by 17.6% to £5.41m for the year to February, compared with £6.57m in the previous financial year.
The slump was primarily caused by a significantly lower pay deal for Lyttle who saw his total pay deal, which included a base salary of £615,000, fall to £1.57m from £2.7m in the previous year after failing to meet targets to secure long-term incentives.
Meanwhile, other directors on the company board, including founders Mahmud Kamani and Carol Kane, received marginally higher pay packets.
Kamani, who owns a 12.5% stake in the business, saw his pay packet increase by 1.2% to £1.39 million for the year, including a £900,000 annual bonus. Kane also saw her pay deal nudge slightly higher, rising to £1.38m for the year.
Earlier this month, Boohoo reported that revenues jumped 41% to £1.74bn in the year to 28 February.
Pre-tax profits lifted by 35% to £124.7m as the group was boosted by higher sales and the “successful integration” of brands bought out of administration.