Asos introduces a ‘Value Creation Plan’ to boost shareholder value through senior leadership incentives.
- The new plan sets a maximum executive bonus of 150% of base salary, contingent on share price growth.
- This initiative replaces the current ‘Long Term Incentive Scheme’ with a more growth-oriented approach.
- The policy change reflects Asos’ focus on aligning leadership with ambitious company growth amid financial challenges.
- A shareholders’ meeting to discuss these proposals is scheduled for 20 August in London.
Asos has unveiled a new remuneration strategy known as the ‘Value Creation Plan’ aimed at enhancing shareholder value through significant growth in the company’s share price. The proposed plan, announced on 2 August, outlines a maximum annual bonus for executives set at 150% of their base salary. This incentive will be applicable only if the share price exceeds £6.70, which is approximately double the share price when the plan development started.
The introduction of this scheme signifies a shift from the existing ‘Long Term Incentive Scheme’ to a more aggressive incentive structure. The initiative is designed to align Asos’ executive directors and senior leadership team with the company’s ambitious growth objectives. Such restructuring comes at a time when Asos reported an 18% sales decline for the 26 weeks ending 3 March 2024. Despite the drop in sales, the company noted an improvement in free cash flow by £240 million year-on-year.
Asos acknowledges the discrepancies in remuneration arrangements between management and other company sectors. The company clarifies that these variations are essential to maintain competitiveness in diverse talent markets. This approach underlines the ambitious nature of the new incentive plan, which aims to both motivate and reward company leaders.
Details of these new pay proposals will be presented at a general meeting for Asos shareholders, scheduled for 20 August in London. Following the announcement of this plan, Asos experienced a drop in its share price from £3.61 to £3.40 as observed on 5 August 2024.
In an accompanying statement, Asos revealed a strategic decision to remove bonus incentives related to diversity, equity, and inclusion. This move is intended to sharpen the company’s focus on profitability, reflecting its strategic priorities for pursuing growth.
The proposed Value Creation Plan is a strategic effort by Asos to align executive incentives with shareholder interests through targeted growth initiatives.
