Boohoo Group has decided that its executive directors will not receive planned bonus payouts of £1 million.
- The decision follows discussions with certain shareholders who expressed concerns over the payouts.
- The bonus plan cancellation coincides with Boohoo’s financial losses over the past year.
- During this period, Boohoo’s pre-tax losses widened significantly, raising shareholder concerns.
- Boohoo still recognises the excellent work of its executives despite the decision.
Boohoo Group recently announced that its executive directors will not be receiving bonus payouts, which were initially set at £1 million each. This decision follows discussions with certain shareholders who voiced concerns over the appropriateness of these bonuses in light of the company’s financial performance.
The bonus scheme, which would have provided CEO John Lyttle and co-founders Mahmud Kamani and Carol Kane with £300,000 in cash and £700,000 in shares, was waived. This move was made ahead of Boohoo’s Annual General Meeting scheduled for 10 June.
The cancellation of planned bonuses comes amid Boohoo’s challenging financial period. For the 12 months ending 29 February 2024, Boohoo reported pre-tax losses that widened to £159.9 million, up from £90.7 million in the previous year. Furthermore, revenue decreased by 17% year-on-year to £1.46 billion, while gross profit fell by 16% to £756 million. Adjusted EBITDA also declined by 7% to £58.6 million.
Despite these financial setbacks, Boohoo stressed in a statement that the “formulaic outcome” does not accurately reflect the “excellent work” performed by the management team. The company acknowledged that additional engagement with shareholders on this matter might be warranted in the future.
Boohoo claims the decision to waive the bonuses doesn’t negate the efforts made by the executive team which are viewed as necessary for positioning the company for future success. The executive bonuses would not have been paid according to the firm’s target-based framework, but Boohoo initially suggested that this outcome might not ensure the retention and motivation of its management team.
Boohoo Group has taken corrective steps, aligning its bonus policies with shareholder expectations amid financial difficulties.
