Boohoo share price drop leads to executive pay revamp
Fast-fashion retailer Boohoo has announced that it is planning to switch to a conventional executive pay policy after a fall in share prices.
When sales sky-rocketed at Boohoo during the pandemic, the company introduced an executive pay policy that linked rewards with the growth of the business. Under the previous scheme co-founders Mahmud Kamani and Carol Kane stood to gain up to £100 million if the company's market value hit £7.55 billion by June 2023.
However, share prices at Boohoo have fallen and as of today the company is valued at just above £1 billion. This has caused Boohoo to propose a new more "conventional" bonus plan that sees executive directors receiving a maximum of 200% of their basic salary as an incentive.
The new scheme, proposed in the group's 2022 annual report, was outlined to "act as a powerful retention tool" as the company faces the reality that the growth share plan, introduced in 2019, and the Management Incentive Plan, introduced in 2020, may not vest at the levels originally hoped for.
It will be based on sales and profits, while also being subject to the group's "agenda for change” initiative, which benchmarks Boohoo’s environmental, social and governance impact. However the agenda has recently been declared a success.
No decision on the new bonus scheme has yet been made, as it is subject to a vote by shareholders.
