Boohoo's shareholders have staged a major revolt against its new £175m bonus plan.
After being announced last month, the Manchester-headquartered fashion giant asked shareholders to back the proposals at a general meeting earlier today (March 8).
However, the vote saw significant opposition with 37% of votes cast against it. The new plan will see bonuses handed out over a period of time if Boohoo's market capitalisation reaches £5bn.
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In a statement, Boohoo said: "The Remuneration Committee will reflect on feedback gathered throughout the consultation process regarding the Growth Plan, and will continue to engage with shareholders with regard to the group's remuneration policy to ensure that shareholder views are considered."
When the plan was unveiled on February 16, Boohoo said it had been forced to rethink its bonus plan after a "unique and unprecedented set of macro-economic and market headwinds experienced over the last three years".
The Manchester-headquartered group said there is now "little or no value" in the existing Growth Share Plan or the current Management Incentive Plan after its market capitalisation "significantly decreased".
As a result, it added they "no longer operate as an effective incentive mechanism for this critical population who are responsible for driving business performance and delivering boohoo's strategic objectives".
At the time, Boohoo's market capitalisation stood at £591.67m after its shares closed at 46.65p each on Tuesday, February 15.
That was a rise of more than 33% so far this year but from a historic low of 33.89p reached on December 28, 2022.
Under the new plan its shares would have to rise to £3.95, a 747% increase on the closing price on Tuesday, February 15.
Since then Boohoo's share price has increased to 54.3p and its market capitalisation now stands at over £700m.
Boohoo's share price has never been higher than the £4.12 it achieved in June 2020.
The plan would also net group chief executive John Lyttle a maximum bonus of £50m, a £25m pay out for chief financial officer Shaun McCabe, £20m to co-founder Carol Kane and £12.5m to Samir Kamani, the CEO of Boohoo and BoohooMAN.
In May 2022, BusinessLive reported that Mr Lyttle could receive a bonus worth 200% of his £652,000 salary if he meets a number of targets over the next three years.
At the time, the group unveiled a new long-term incentive plan (LTIP) in its annual report which would see the CEO benefit if various targets such as revenue, earnings growth and ESG markers are achieved.
Mr Lyttle would also gain £50m if the company's stock market capitalisation increased to £5.6bn by 2024.
Iain McDonald, chairman of the Remuneration Committee, said: "The Growth Plan was designed with an intention to rebuild substantial shareholder value through the delivery of extremely ambitious targets, and it acts as a powerful retention, recruitment and incentivisation tool for all participants, resolutely aligning their interests with those of our shareholders.
"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."
Executive chairman and co-founder Mahmud Kamani added: "As Boohoo's largest shareholder I wholeheartedly endorsed the Growth Plan, recognising the importance of aligning the interests of all shareholders with those of our hardworking 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."
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