Manchester-based online fashion giant Boohoo Group plc said on Friday it intends to implement a “management incentive plan” that will pay out up to a maximum of £150 million if the stock market value of the firm rises by 66% over a three-year performance scheme period.
“The remuneration committee believes that the interests of shareholders will be best served by granting the awards immediately to the recipients without recourse to a shareholder vote, which will ensure that they are immediately incentivised to deliver stretching share price growth for the benefit of all boohoo’s shareholders as the group executes its multi-brand online strategy,” said AIM-listed Boohoo.
“A shareholder vote is not required by either the QCA Corporate Governance Code or by the AIM Rules.”
The team of executives taking part in the plan would include executive chairman Mahmud Kamani (33.33%), executive director Carol Kane (33.33%) — the co-founders of the business — and chief financial officer Neil Catto with 6.67%.
Kamani and Kane sold Boohoo shares worth £142.5 million in December 2019.
Samir Kamani, CEO of the group’s menswear brand boohooMAN, who is the son of Mahmud Kamani, would get 16.67% of the plan.
“The remaining 10.00% of the plan is intended to be granted to a number of key individuals across the wider management team, with no individual receiving more than 3%,” said Boohoo.
Boohoo’s brands include prettylittlething.com and Nasty Gal as well as Oasis, Warehouse, MissPap, Karen Millen and Coast.
On the details of the incentive plan, Boohoo said in a stock exchange statement: “The plan will pay out in full and to its maximum level of £150 million (across all participants) if the market capitalisation rises by 66 per cent. to £7.55 billion over the 3 year-performance scheme period, which equates to a compound average growth rate (CAGR) of at least 18 per cent.
“The starting market capitalisation of the scheme is £4.54bn, based on the average share price of the group for a period of 30 trading days ending on 16 June 2020 …”
Boohoo shares on Friday were trading around 412p, giving the firm a current stock market value of around £5.16 billion. The shares have soared almost 100% in the past year.
Boohoo added: “At the maximum pay-out threshold, the beneficiaries of the plan would receive a maximum of just under 5 per cent. of the shareholder value created over that period.
“Under the plan, CAGR of less than 11 per cent. over this period yields nil value to all participants …
“Participants in the plan will subscribe for B shares in boohoo holdings limited, an intermediary holding company of the group, and the group will have the option to pay participants in boohoo shares or cash at its discretion when the plan crystallises.
“Provisions will be made to the plan to make the adjustments for increases in market capitalisation arising from corporate events such as issuing shares for acquisitions so that the benefits derived from the plan only arise from organic growth.
“The plan also provides clawback provisions which allow repayment in defined circumstances.”