Global fashion house boohoo is facing shareholder reluctance as it implements a new growth strategy that could see group CEO John Lyttle pocket £50 mn ($60 mn).
The backlash follows a general meeting held on March 8 in which shareholders voted 37 percent against the growth strategy.
The plan aims to deliver long-term sustainable growth and rebuild shareholder value while ‘enabling the retention and motivation of significant core talent and the wider employee population’.
When operational, however, it could see CFO Shaun McCabe awarded £25 mn, co-founder Carol Kane compensated £20 mn and Samir Kamani, CEO of boohoo and boohooMAN, awarded £12.5 mn.
While there is no legal or regulatory requirement for shareholder approval to be sought for the growth plan, the fashion giant says it ‘voluntarily’ sought the approval as a matter of good corporate governance.
The plan is an updated version of similar proposals launched in 2019 and 2020, both of which the remuneration committee found to have ‘little or no value’ and which are ‘no longer operating as an effective incentive mechanism.’
The reinvented growth plan is designed to focus on creating shareholder value through a series of share price hurdles.
Mahmud Kamani, executive chairman of boohoo and its largest shareholder, says he ‘wholeheartedly endorses’ the growth plan, recognizing the importance of aligning the interests of all shareholders with boohoo colleagues.
‘The value generated for shareholders would be some 25 times greater than the maximum award of the plan and I am therefore pleased that it is being implemented,’ he says.
Despite reluctance, the growth plan was passed, with 62 percent voting in favor of it.
The remuneration committee says it will reflect on feedback gathered throughout the process and will engage with shareholders to ensure their views are considered.
Iain McDonald, chairman of the remuneration committee, says: ‘The growth plan was designed with an intention to rebuild substantial shareholder value through the delivery of extremely ambitious targets.
‘We followed a detailed consultation exercise with a number of our larger shareholders and we thank all of them very much for their engagement and contributions.’