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UK fast-fashion retailer Boohoo has cancelled annual bonuses worth £3mn and ditched a new pay scheme for its top bosses after talks with shareholders amid widening losses.
The decision comes days after the company, which owns brands including Debenhams, Karen Millen and PrettyLittleThing, outlined plans in its annual report to “simplify” its remuneration policy ahead of its annual meeting with investors on June 20.
Boohoo said in a statement on Tuesday that it “has engaged with certain shareholders . . . and has decided not to implement the incentive plan at this time”, adding it will “consider further engagement with shareholders”.
Executive directors including Boohoo co-founders Mahmud Kamani and Carol Kane as well as chief executive John Lyttle would also waive bonuses worth £3mn for the year to February 29 2024, the company added, after pre-tax losses swelled to almost £160mn during the year from £90.7mn the year before.
Kamani, Kane and Lyttle, were in line for bonuses of £1mn each in cash and shares, according to its latest annual report, having earned £1.6mn in bonuses the previous year.
The online retailer, which benefited from the boom in online shopping during the pandemic, has had to contend with a fall in sales amid the cost of living squeeze and shoppers returning to stores in greater numbers than expected. The stock has lost almost 85 per cent of its value over the past five years, giving it a market capitalisation of £435mn, and built up net debts of £95mn in its most recent financial year, from almost £6mn of net cash the previous year.
“What was it thinking in the first place? The idea of doling out the cash to line the pockets of the bigwigs when Boohoo has gone into reverse with earnings is madness,” said Dan Coatsworth, investment analyst at AJ Bell.
The about turn is the latest in a series of confrontations with shareholders over the years about executive pay.
The proposed new incentive plan could have led to a maximum award of up to 500 per cent of the executives’ salaries this financial year, dependent on performance targets.
Kamani, Kane and Lyttle were not eligible for a bonus in the year to February 29 2024, according to Boohoo’s remuneration policy, owing to the poor financial performance of the group, but the remuneration committee agreed to a payout anyway.
They said in the annual report that it “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”.
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