Shareholder discontent could be on the cards again for fast-fashion retailer Boohoo (BOO) after the company tabled a revamped set of management incentives last week. This means executives could still take home tens of millions of pounds despite the company’s share price diving in recent years. The shares have fallen 85 per cent over the past two years.
Under the proposed bonus scheme, five tranches of shares will be awarded to executives when a given 90-day average share price is attained. Chief executive John Lyttle stands to earn a maximum award of £50mn under the new growth plan, while chief financial officer Shaun McCabe could walk away with £25mn. Co-founder Carol Kane is part of the scheme, but fellow founder Mahmud Kamani is not. He already holds just under 13 per cent of the company, so needs little further incentive to boost the share price. Kane holds 1.6 per cent, although she will not participate in the scheme’s first two tranches.
For all five tranches of shares to be awarded, the group’s market capitalisation would need to reach a minimum of £5bn, implying a share price of 395p. With the retailer’s stock currently hovering around the 50p mark, the plan looks ambitious – especially given that the first payout would be awarded in the event of a near-doubling in the share price to 95p. But given the company is coming from a low base, this is by no means unachievable.