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Boohoo introduces new growth plan to rebuild shareholder value

Sophie Smith
16 February 2023

Boohoo Group itends to adopt a new growth share plan in an effort to drive long-term sustainable growth and rebuild shareholder value.

The group's Remuneration Committee believes that there is "little or no value" in its existing growth share plan, which was introduced in 2019. It said the plan "no longer operates as an effective incentive mechanism for the critical population who are responsible for driving business performance and delivering Boohoo's strategic objectives".

The group hopes that the introduction of a new growth plan will "drive long-term sustainable growth and rebuild shareholder value, while enabling the retention and motivation of significant core talent and the wider employee population".

The plan is designed to focus on creating shareholder value through a series of "distinct, stretching share price hurdles". Value will be received under vested awards on a subsequent anniversary of each share price hurdle being achieved.

Boohoo Group said the awards are divided into five tranches, whereby a distinct 90-day average price hurdle must be achieved within an overall five-year measurement period.

The first tranche requires the share price to reach 95p, with an implied market cap of £1.2 billion, which would result in shareholder value creation of £600 million and an award size of £17.5 million.

The final tranche requires the share price to reach £3.95, with an implied market cap of £5 billion, which would result in shareholder value creation of £4.4 billion and an award size of £55 million.

If all five tranches are achieved, shareholders should receive a cumulative award of £175 million over five years. The awards will be settled in shares, which will be newly issued by the company or transferred out of treasury/the Boohoo Group Employee Benefit Trust.

Iain McDonald, Chairman of the Remuneration Committee, said: "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 company has a proud entrepreneurial heritage, having always encouraged and enabled significant levels of employee share ownership. This scheme extends this principle, delivering more accountability and further alignment with our broader shareholder base."

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