Despite missing financial targets, the founders of fast fashion retailer Boohoo.com saw their pay doubled to approximately £1 million each last year, as they were granted substantial bonuses.
Carol Kane and Mahmud Kamani, both directors of the company, received bonuses equivalent to their annual basic salary.
The directors decided that the founders deserved these substantial bonuses were deserved despite sales and underlying profit targets being unmet.
Kamani’s pay increased from £525,000 to £1.03 million, while Kane’s earnings rose from £496,000 to £987,000.
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Boohoo’s Chief Executive, John Lyttle, received £1.35 million, slightly lower than the £1.38 million from the previous year, as he was also given an annual bonus matching his £851,000 salary.
These payouts occurred despite Boohoo incurring a loss of nearly £91 million in the year ending February 28.
The company experienced an 11 percent decline in annual sales, amounting to £1.8 billion, with a 9 percent decrease specifically in the UK.
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Boohoo warned that sales were likely to decline by up to 5 percent in the following year as consumers curbed spending.
This is due to concerns about the cost of living or and decreased consumer shopping on the high street post-pandemic.
Boohoo’s remuneration committee justified the bonuses by stating that the suggested amount based on the incentive scheme’s formula did not accurately reflect the overall performance of the management team.
The committee recognised the management’s agility in implementing cost reductions across the company, which played a significant role in preserving profitability in a very difficult market.
This was during challenging economic conditions through stock reduction, debt reduction, and cost-cutting measures.
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In the annual report, Iain McDonald, the chair of the committee, noted that the formulaic outcome for the annual bonus did not adequately represent the strong performance of the management team.
There were crucial steps taken to protect the business’s value in volatile economic circumstances.
Boohoo’s shareholders approved a new incentive scheme that could grant John Lyttle a long-term bonus of up to £50 million.
The “growth share plan” would distribute a total of £175 million to executives if the company’s share price reached 395p,
This was more than eight times its current level, and maintained that value for a 90-day average window within the next five years.
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Kane, the co-founder of Boohoo in 2006 alongside executive chair Kamani, could receive up to £20 million under this scheme.
Despite approximately 38 percent of voters opposing the plan at a special meeting in March, it received enough support to proceed.
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