Boohoo Group has decided against awarding £1 million bonuses to its top executives following discussions with shareholders.
- Shareholders expressed dissatisfaction with the proposed bonuses due to Boohoo’s financial downturn.
- CEO John Lyttle, along with co-founders Mahmud Kamani and Carol Kane, agreed to waive their bonuses in light of the company’s fiscal challenges.
- Boohoo reported a significant increase in pre-tax losses and a decline in revenue for the fiscal year ending February 2024.
- The decision reflects Boohoo’s commitment to align with shareholder interests and reassess management incentives for future success.
The Boohoo Group has reversed its decision to grant £1 million in bonuses to key executives, following input from certain shareholders. This move reflects a response to discontent among stakeholders, triggered by the company’s worsening financial performance. Notably, Boohoo’s leadership opted to forgo their bonuses in pursuit of greater shareholder engagement.
Boohoo’s CEO, John Lyttle, and co-founders Mahmud Kamani and Carol Kane were initially poised to benefit from bonuses comprising £300,000 in cash and £700,000 in shares. However, faced with a backdrop of increased losses and declining revenue, they conceded to shareholder demands, illustrating a strategic pivot by the company.
The fiscal year ending February 2024 presented financial challenges for Boohoo, with pre-tax losses soaring to £159.9 million, a stark rise from £90.7 million the previous year. Furthermore, revenue saw a 17% decline to £1.46 billion, accompanied by a 16% reduction in gross profit to £756 million. Adjusted EBITDA also fell by 7%, landing at £58.6 million, underscoring the pressing need for financial adjustments.
In a statement on May 28, Boohoo indicated its openness to continued shareholder engagement regarding executive incentives. The company acknowledged that while its bonus framework aims to reward exceptional managerial efforts and retain talent, the current formula may not effectively reflect these intentions given the present circumstances.
Boohoo’s decision to reassess its management incentive strategy is pivotal as it prepares for its Annual General Meeting on June 10. This approach seeks to balance motivating the executive team with ensuring long-term success for the group, in alignment with shareholder expectations.
Boohoo Group’s decision to withdraw executive bonuses underscores its commitment to shareholder alignment amid financial challenges.
