Boohoo has abandoned plans to award its senior executives bonuses totalling £1 million, following backlash from shareholders in the loss-making fashion chain.
The retailer reportedly faced pressure after unveiling the hefty payouts despite the executives failing to meet their bonus targets for the year.
In its annual report released earlier this year, Boohoo stated that its co-founders Mahmud Kamani and Carol Kane, along with CEO John Lyttle, were entitled to an annual bonus of £1 million, comprised of cash and share awards.
This was despite the company reporting a pre-tax loss of £150 million for the year ending February, up on the £91 million reported the previous year, and revenues falling by 17%.
Consequently, the company did not achieve its own financial objectives for the year, with revenues, adjusted earnings and adjusted cash flow all falling short of its target levels. It also failed to meet its goals for environmental measures, international supply chain milestones and IT project objectives.
Nonetheless, Boohoo had claimed it was disregarding its own pay policy as it did not reflect the “excellent work” performed by its top executives.
“Using the formulaic outcome alone, the FY24 (2024 financial year) annual bonus out-turn was 0% of maximum,” the report read.
“However, the Remuneration Committee feels that the formulaic outcome is not an accurate reflection of the excellent work carried out during the year to set the business up for future success, nor will it ensure that the management team is motivated and retained throughout the next financial year which will be pivotal for the group’s long-term success.”
But on Tuesday, Boohoo informed stakeholders that its executive directors had “opted to waive their entire bonus entitlement” for the year.
As a result, without the bonuses, Mr Kamani will receive approximately £503,000, Ms Kane £524,000, and Mr Lyttle £713,000 for the latest year.
The fashion giant also announced it would not proceed with its new “Boohoo Incentive Plan”, after having “engaged with certain shareholders” in preparation for its annual general meeting (AGM) next month.
This proposed plan was to merge its annual bonus and long-term incentives into a single scheme, aiming to replace the current incentive system which was deemed not “motivational”.
The Times has reported that some investors were ready to challenge the remuneration policy at the upcoming AGM, with one significant investor reportedly being “furious” over the alterations to the bonus structure.
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