Large number of Boohoo shareholders vote against bonus plan
It’s not just about keeping retail customers happy. Keeping shareholders on your side is also essential for stock exchanged-list firms, and over a third of Boohoo’s aren’t happy. The digital retailer’s plan for a new £175 million bonus plan has come up against significant opposition.
Announced last month, the new plan will see bonuses handed out over a period if Boohoo's market capitalisation reaches £5 billion. After a general meeting held Wednesday, 37% voted against the plan but it was backed by just over 62% of shareholders.
In a statement, Boohoo said: “The Remuneration Committee will reflect on feedback gathered throughout the consultation process regarding the Growth Plan, and will continue to engage with shareholders with regard to the group’s remuneration policy to ensure that shareholder views are considered.”
When the plan was unveiled in mid-February, Boohoo said it had been forced to rethink its bonus plan after a “unique and unprecedented set of macro-economic and market headwinds experienced over the last three years”.
The group said there is now “little or no value” in the existing Growth Share Plan or the current Management Incentive Plan after its market capitalisation “significantly decreased”.
As a result, it added they “no longer operate as an effective incentive mechanism for this critical population who are responsible for driving business performance and delivering Boohoo's strategic objectives”.
At the time, Boohoo's market capitalisation stood at £591.67 million after its shares closed at 46.65p each on 15 February. That was a rise of more than 33% so far this year but from a historic low of 33.89p reached on December 28 2022.
Under the new plan its shares would have to rise to £3.95, a 747% increase on the closing price on February 15. Since then, Boohoo's share price has increased to 54.3p and its market capitalisation now stands at over £700 million.
Co-founder and executive chairman Mahmud Kamani said: “As Boohoo’s largest shareholder I wholeheartedly endorsed the growth plan, recognising the importance of aligning the interests of all shareholders with those of our hardworking Boohoo colleagues.
“The value generated for shareholders would be some 25 times greater than the maximum award of the plan, and I am therefore pleased that it is being implemented.”
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