Fast fashion retailer Boohoo’s founders, Carol Kane and Mahmud Kamani, doubled their pay to about £1 million each last year despite missing financial targets. They were given bonuses equivalent to their annual basic salary instead of the 30% they had been due to receive. Boohoo dived almost £91 million into the red in the year to February 28 after its annual sales fell 11% to £1.8 billion, including a 9% decline in the UK. The online retailer warned that sales were likely to decrease by as much as 5% in the year ahead as shoppers rein in spending because of cost of living concerns or switch back to the high street.
As covered by Business of Fashion, the founders of fast fashion retailer Boohoo, Carol Kane and Mahmud Kamani, doubled their pay to about £1 million each last year as they were handed hefty bonuses despite missing financial targets. This news comes after Boohoo reported diving almost £91 million into the red in the year to February 28 after its annual sales fell 11 percent to £1.8 billion, including a 9 percent decline in the UK.
Despite missing sales and underlying profit targets, directors decided that both Kane and Kamani deserved bonuses equivalent to their annual basic salary. Kamani’s pay was £1.03 million, up from £525,000 a year before, while Kane earned £987,000, up from £496,000. John Lyttle, the chief executive of Boohoo, meanwhile earned £1.35 million, a slight fall from the £1.38 million a year before, as he was also awarded an annual bonus equal to his annual salary of £851,000.
Boohoo’s remuneration committee said it had awarded the bonuses after it had decided that the amount suggested by the incentive scheme’s formulae was “not reflective of the After taking everything into account performance of the management team.” The committee said the management team were awarded half their potential maximum bonus of double their salary as they had been “very agile in driving cost reductions across the group, which has in large part preserved the profitability of the business in such difficult economic circumstances” by reducing stock, net debt and costs.
In the annual report, the chair of the committee, Iain McDonald, said: “Taking this into account, the remuneration committee feels that the formulaic outcome under the annual bonus is not an accurate reflection of the strong performance of management during the year and the critical steps they have taken to preserve the value of the business in such volatile economic conditions.”
Boohoo’s shareholders have approved a new incentive scheme that could award Lyttle a long-term bonus of as much as £50 million in a performance plan that made it easier for the senior management team to hit targets. Under the “growth share plan”, a total £175 million would be paid out to executives if the company’s share price reached 395p — more than eight times its current value.
The payouts to Boohoo’s founders have sparked criticism from investors, with some calling for a rethink of the company’s executive pay policies. The company has responded by stating that it is committed to maintaining a strong alignment between the interests of its management team and its shareholders, and that it regularly reviews its remuneration policies to ensure they are appropriate and effective.
Boohoo has faced a number of challenges in recent years, including allegations of poor working conditions at its factories and concerns over its environmental impact. The company has responded by implementing a number of measures to improve its sustainability and social responsibility, including the appointment of a new sustainability director and the introduction of a new ethical trading policy.
Despite these challenges, Boohoo remains one of the UK’s most successful fast fashion retailers, with a market capitalization of around £3.5 billion. The company has also continued to expand internationally, with recent launches in the US and Middle East.
To wrap up, while Boohoo’s founders have been awarded hefty bonuses despite missing sales and profit targets, the company has defended its decision by stating that the management team has taken critical steps to preserve the value of the business in difficult economic conditions. However, the payouts have sparked criticism from investors, who are calling for a rethink of the company’s executive pay policies. As Boohoo continues to face challenges around sustainability and social responsibility, it will be interesting to see how the company responds and adapts in the coming years.