Boohoo unveils £150m management incentive plan

Boohoo
Mahmud Kamani and Carol Kane

Online fashion group Boohoo has unveiled a £150m incentive plan for senior directors following its stated ambition to grow the group into a global force.

At its recent AGM, the business said it had its sights set on becoming an international fashion group in the vein of H&M and Inditex but with an online portfolio of brands.

The plan is designed to ensure the leadership team is “motivated to deliver long-term sustainable growth for its shareholders”. Participants include the business’ founders Mahmud Kamani and Carol Kane, along with CFO Neil Catto. Also included is Samir Kamani, son of Mahmud Kamani, and CEO of BoohooMAN.

Manchester-based Boohoo currently has approximately 3.77% of its issued share capital held under various incentive plans that have been previously disclosed to shareholders.

Under the proposed Plan announced today, if the plan achieves a maximum pay out of £150m and pays all participants within the Plan in Boohoo shares, on the basis of a 600p share price, this would create a further 1.99% dilution to existing shareholders, taking the total potential dilution to 5.77% under all current and proposed employee share plans.

Mahmud Kamani will hold 33.33% of the plan, as will Carol Kane, while Catto will hold 6.67%. Samir Kamani, who has been identified as part of a long-term succession plan to take over more responsibility across the group’s brand portfolio, will hold 16.67%. The remaining shares will be distributed among other key individuals with none holding more than 3%.

CEO John Lyttle, who joined the group from Primark in March of last year, is on a plan that will see him receive a £50m bonus if the group hits a valuation of £6bn by March 2024. At present value, it is just £800m shy of that target after its shares leapt this year. The bonus caused some unrest among shareholders at the recent AGM.

Boohoo has seen dramatic growth since it floated on AIM in March 2014. At the time of the IPO the business has sales of £109.8 million with an EBITDA of £12.2 million. In its latest results to 29 February 2020 it recorded sales of £1.235 billion and an adjusted EBITDA of £126.5 million.

The business has been highly acquisitive and has diversified from its core base of fast fashion, often taking high street brands and converting them into online only entities using its “test and repeat” model, whereby styles are tested on its sites and repeated if they turn out to be best sellers.

Its portfolio includes Boohoo, BoohooMAN, PrettyLittleThing (founded by another of Mahmud Kamani’s sons Umar Kamani in which it recently acquired 100% of shares), NastyGal, Miss Pap, Karen Millen, Coast, Oasis and Warehouse. The IP and associated assets of the latter two were recently acquired for £5.25m from restructuring specialists Hilco following their collapse into administration and closure of all of their physical retail stores.

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