The founders of fast fashion retailer Boohoo.com doubled their pay to about £1m each last year as they were handed hefty bonuses despite missing financial targets.
Directors decided that both Carol Kane and Mahmud Kamani deserved bonuses equivalent to their annual basic salary – instead of the 30% they had been due to receive after missing sales and underlying profit targets.
Kamani’s pay was £1.03m, up from £525,000 a year before, while Kane earned £987,000, up from £496,000. John Lyttle, the chief executive of Boohoo, meanwhile earned £1.35m, a slight fall from the £1.38m a year before, as he was also awarded an annual bonus equal to his annual salary of £851,000.
The payouts came despite Boohoo diving almost £91m into the red in the year to 28 February after its annual sales fell 11% to £1.8bn including a 9% decline in the UK.
The online retailer warned that sales were likely to decrease by as much as 5% in the year ahead as shoppers rein in spending because of cost of living concerns or switch back to the high street now that pandemic restrictions have fully ended.
Boohoo’s remuneration committee said it had awarded the bonuses after it had decided that the amount suggested by the incentive scheme’s formulae was “not reflective of the overall performance of the management team”.
The committee said the management team were awarded half their potential maximum bonus of double their salary as they had been “very agile in driving cost reductions across the group, which has in large part preserved the profitability of the business in such difficult economic circumstances” by reducing stock, net debt and costs.
In the annual report, the chair of the committee, Iain McDonald, said: “Taking this into account, the remuneration committee feels that the formulaic outcome under the annual bonus is not an accurate reflection of the strong performance of management during the year and the critical steps they have taken to preserve the value of the business in such volatile economic conditions.”
Boohoo’s shareholders have approved a new incentive scheme that could award Lyttle a long-term bonus of as much as £50m in a performance plan that made it easier for the senior management team to hit targets.
Under the “growth share plan”, a total £175m would be paid out to executives if the company’s share price reached 395p – more than eight times higher than current levels – and remained there within a 90-day average window within the next five years.
Kane, who co-founded Boohoo in 2006 along with the executive chair, Kamani, could receive up to £20m.
The scheme was opposed by almost 38% of those who voted at a special meeting in March but won enough support to go ahead.
