As a response to unprecedented macroeconomic and market headwinds, Boohoo has unveiled a new Growth Plan in a bid to drive long-term sustainable growth and rebuild shareholder value.
In a regulatory filing, the retail group said its market capitalisation had significantly decreased due to the current market conditions, resulting in the Remuneration Committee’s decision to introduce the plan.
The new scheme comes as an update to its 2019 Growth Share Plan and 2020 Management Incentive Plan, both of which the committee ultimately decided held “little or no value”, no longer operating as an “effective incentive mechanism” for the group.
The new strategy has already undergone a consultation process with the group’s largest shareholders, who provided feedback in order to finalise the points.
It will “focus solely on creating shareholder value through a series of distinct, stretching share price hurdles”, Boohoo said.
Scheme to apply to wider employee population
The scheme has been split into five trenches and extends beyond the executive team to now include further members of senior leadership and other employees, building on its pushing of becoming a recruitment and incentivisation tool.
Each trench will be subject to a performance condition, whereby a 90-day average share price hurdle must be achieved within a five-year measurement period.
Boohoo said the plan will ultimately lead to a maximum dilution of around 6.06 percent for existing shareholders, while the company’s market capitalisation will be required to reach a minimum of five billion pounds.
In turn, this would create an implied shareholder value of around 4.4 billion pounds.
Speaking on the plan, Iain McDonald, chairman of the Remuneration Committee, said: "The Boohoo Group has an outstanding executive team whose ongoing retention is crucial, particularly in an era where the recruitment of such quality is more competitive than ever before.
“This plan facilitates retention and resolutely aligns our executives' interests with those of shareholders. In designing the plan, we recognised it needed to go deeper into the business than prior schemes while leaving headroom to attract the world-class talent that is essential to the execution of our strategy and growth ambitions.
“The company has a proud entrepreneurial heritage, having always encouraged and enabled significant levels of employee share ownership. This scheme extends this principle, delivering more accountability and further alignment with our broader shareholder base."