The popular online fashion brand, Boohoo, is currently under fire by their investors for the timing and operation of its brand-new bonus scheme, which is set to lead to a £150 million payout for its retail executives.
The brand’s new bonus scheme reportedly states that if Boohoo’s share price increases by 66% over the following three years, it will pay £150 million to its top executives and founders. According to The Times, the move was heavily criticised after last Friday’s announcement by the Shadowfall hedgefund, as well as Share Action and Minerva Analytics.
How much will the retail executives receive?
Boohoo released a statement claiming that Mahmud Kamani, the brand’s founder and chairman, and Carol Kane, its co-founder, could both be set to receive £50 million if the brand reaches its target of £7.55 billion. BoohooMan’s chief executive and Kamani’s son, Samir, could also be set to receive a payout of £25 million. Neil Catto, the company’s chief of finance, could be lined up to receive £10 million. The remaining amount of £15 million is set to be shared between the rest of Boohoo’s retail executive team.
Currently, Boohoo is listed on the Aim market, which is less regulated, which means that their plans are not required to be held to a vote by shareholders.
The brand set the scheme’s starting point at its average share price from the beginning of June up to the 16th of the month, which stands for a £4.5 billion total market cap. The figure is based on the brand’s value the day before they released their update to trading, which saw a 45% increase in sales to a total of £368 million and a 6.6% increase in share prices.
Matthew Earl, the managing director of Shadowfall, said:
“We believe the timing of the reference price immediately before this update is particularly odd given management’s likely awareness of the content of that trading update. Especially considering the fact that the shares rose sharply on the back of it.”
Boohoo has since responded to the backlash by claiming that the scheme was only put in place after the 17th June, when it had passed its closed period.