TIDMBOO
RNS Number : 1476R
boohoo group plc
26 June 2020
For Immediate Release 26 June 2020
The information contained within this announcement is deemed by
the company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
boohoo group plc
("boohoo" or "the Group")
Management Incentive Plan
Positioning for the next phase of growth
The Remuneration Committee of boohoo group plc is pleased to
announce the intention to implement a new Management Incentive Plan
(the "Plan") as it positions the Group and its management team for
the next phase of growth.
The Group's Remuneration Committee is committed to ensuring that
the Group's leadership team is motivated to deliver long-term
sustainable growth for its shareholders, as the Group targets a
continuation of the exceptional levels of performance that it has
delivered since IPO. The Plan will be focused on members of the
Group's management who are most able to impact the Group's
shareholder returns. Participation in the Plan by any member of the
Group's management team will be supervised by the Remuneration
Committee.
The primary objective of the Plan is to motivate key members of
the management team to continue to achieve exceptional levels of
performance across the Group and deliver further returns for its
shareholders.
The Remuneration Committee has carefully considered the
structure of the Plan and looked to ensure it not only retains and
incentivises management, but that it is also acting in the best
interest of all shareholders.
Structure of the Plan
The Plan will be share price focussed to align interests of
management with existing and potential shareholders and will be a
3-year scheme measured on 17 June 2023. The single share price
growth measure is well aligned to the Group's strategy of
delivering substantial and sustained returns to shareholders by the
ongoing successful execution of the Group's vision to lead the
fashion e-commerce market globally through its scalable multi-brand
platform.
The Plan will pay out in full and to its maximum level of GBP150
million (across all participants) if the market capitalisation
rises by 66 per cent. to GBP7.55 billion over the 3
year-performance scheme period, which equates to a compound average
growth rate ("CAGR") of at least 18 per cent. The starting market
capitalisation of the scheme is GBP4.54bn, based on the average
share price of the Group for a period of 30 trading days ending on
16 June 2020. At the maximum pay-out threshold, the beneficiaries
of the Plan would receive a maximum of just under 5 per cent. of
the shareholder value created over that period. Under the Plan,
CAGR of less than 11 per cent. over this period yields nil value to
all participants.
The following table shows the key targets for the scheme and
value created:
Target share price
(p) 500 550 600
Market Cap (GBPbn) 6.295 6.924 7.554
------- ------- ------
Value created (GBPbn) 1.752 2.381 3.011
------- ------- ------
CAGR over 3 years 11% 15% 18%
------- ------- ------
% pay out 33.33% 66.66% 100%
------- ------- ------
Pay out (GBPm) 50 100 150
------- ------- ------
Pay out (% of value
created) 2.85% 4.20% 4.98%
------- ------- ------
Pay out (% of total
market cap) 0.79% 1.44% 1.99%
------- ------- ------
Participants in the Plan will subscribe for B shares in boohoo
holdings limited, an intermediary holding company of the Group, and
the Group will have the option to pay participants in boohoo shares
or cash at its discretion when the Plan crystallises. Provisions
will be made to the Plan to make the adjustments for increases in
market capitalisation arising from corporate events such as issuing
shares for acquisitions so that the benefits derived from the Plan
only arise from organic growth. The Plan also provides clawback
provisions which allow repayment in defined circumstances.
Shares under option and impact of the Plan
The Group currently has approximately 3.77 per cent. of its
issued share capital held currently under various incentive plans
that have been previously disclosed to shareholders.
Under the proposed Plan announced today, if the Plan achieves a
maximum pay out of GBP150m and pays all participants within the
Plan in boohoo shares, on the basis of a 600p share price, this
would create a further 1.99 per cent. dilution to existing
shareholders, taking the total potential dilution to 5.77 per cent.
under all current and proposed employee share plans.
Executive Directors participating in the Plan
It is intended that the following Executive Directors will
participate in the Plan and will hold approximately the following
proportions;
Director Percentage of the Plan
Mahmud Kamani, Group Executive Chairman 33.33%
-----------------------
Carol Kane, Group Co-Founder and
Executive Director 33.33%
-----------------------
Neil Catto, CFO 6.67%
-----------------------
The Co- founders of boohoo, Mahmud Kamani and Carol Kane, have
been the architects of the Group's strategy and instrumental to the
Group's success to date. Since the Group's IPO in March 2014, it
has achieved exceptional levels of revenue and EBITDA growth,
achieving in its most recent financial year ended on 29 February
2020 revenue of GBP1.235 billion and an adjusted EBITDA of GBP126.5
million, compared with GBP109.8 million and GBP12.2 million
respectively at IPO. The Group has seen its market capitalisation
increase from GBP560 million on IPO to today's levels.
Throughout this period the Remuneration Committee did not grant
awards to the two Co-founders in the Group's long-term incentive
arrangements, preferring to motivate and incentivise those members
of the senior team with less significant shareholdings in the
Group.
Since John Lyttle joined as Group CEO in March 2019, the
enlarged and strengthened Executive team has had substantially
enhanced bandwidth to formulate, plan and begin to execute a
multi-brand online strategy, adding five brands to the Group's
platform since then. Now that PrettyLittleThing has become a wholly
owned subsidiary of the Group, the Remuneration Committee has
determined that it is the appropriate time to ensure that interests
across the Group's senior Executive team are aligned, and focussed
and incentivised to continue to create premium growth and returns
for its shareholders.
The ongoing commitment of the Co-founders, with their expertise,
proven track records and excellent working relationships with the
Group CEO and other members of the management team, is essential to
maximising shareholder value creation. The Remuneration Committee
welcomes their combined commitment to a further three years of
absolute focus, to make the most of the global opportunities
currently facing the Group for the benefit of all shareholders and
stakeholders through their first-time participation in the
long-term incentive arrangements of the Group.
Neil Catto has been CFO at boohoo since before the IPO and has
been a key member of the management team delivering the very
substantial shareholder value creation over the period. The
Remuneration Committee has decided to allocate 6.67% of the Plan to
Neil to incentivise him and retain his services for the Group's
ongoing development, while aligning his remuneration potential with
other key members of the management team.
Mahmud Kamani, Carol Kane and Neil Catto are related parties as
defined by the AIM Rules for Companies ("the AIM Rules") given they
are Directors of the Company and the grant of shares to each of
them under the Plan will therefore be a related-party transaction
for the purposes of Rule 13 of the AIM Rules. The independent
directors (being the Non-Executive directors) consider, having
consulted with Zeus Capital, the Group's Nominated Adviser, that
the terms of the Plan are fair and reasonable in so far as the
Group's shareholders are concerned.
Other Participants in the Plan
Also included in the Plan announced today, is Samir Kamani, CEO
of the Group's fast-growing menswear brand boohooMAN, launched
online in 2016. Samir is the son of the Group Executive Chairman,
Mahmud Kamani, and the Remuneration Committee has decided to
allocate 16.67% of the Plan to Samir, reflecting the growing
importance and success achieved to date by boohooMAN. Under Samir's
stewardship, boohooMAN is currently the fastest growing brand
within the Group. boohooMAN is a key pillar to the future growth of
the Group.
Furthermore, as part of the long-term succession planning of the
business, Samir has been identified by the Group CEO to take on a
wider Group role across other brands and as a key figure in the
future leadership team of the wider Group.
The remaining 10.00% of the Plan is intended to be granted to a
number of key individuals across the wider management team, with no
individual receiving more than 3%. This management team, together
with the Executive Directors, will be instrumental in the future
success of the Group as it looks to deliver the next phase of
growth that in turn will create long term value for its
shareholders.
Corporate Governance considerations
Boohoo has publicly stated that it has adopted the QCA Corporate
Governance Code, and that it will take into account the principles
of the UK Corporate Governance Code and other best practice as
appropriate in its approach to executive remuneration. The QCA
Corporate Governance Code requires that shareholders be consulted
where performance related remuneration is under consideration,
whilst the UK Corporate Governance Code would require proposals
such as these to be subject to a shareholder vote.
As stated, the Remuneration Committee has carefully considered
the structure of the Plan and looked to ensure it not only retains
and incentivises management, but also that the Plan is in the best
interest of all shareholders. The Remuneration Committee has
undertaken some shareholder consultation and taken on board
feedback received. The Remuneration Committee believes that the
interests of shareholders will be best served by granting the
awards immediately to the recipients without recourse to a
shareholder vote, which will ensure that they are immediately
incentivised to deliver stretching share price growth for the
benefit of all boohoo's shareholders as the Group executes its
multi-brand online strategy. A shareholder vote is not required by
either the QCA Corporate Governance Code or by the AIM Rules.
-ends-
Enquiries
boohoo group plc
Neil Catto, Chief Financial Officer Tel: +44 (0)161 233
2050
Alistair Davies, Investor Relations Tel: +44 (0)161 233
2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289
5520
Zeus Capital - Nominated adviser and joint
broker
Nick Cowles/Andrew Jones (Corporate Finance) Tel: +44 (0)161 831
1512
John Goold/Benjamin Robertson (Corporate Tel: +44 (0)20 3829
Broking) 5000
Jefferies - Joint broker
Philip Noblet/Max Jones Tel: +44 (0)20 7029
8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth/ Kim Looringh-van Beeck/Toto Tel: +44 (0)20 7466
Berger 5000
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and
innovative brand targeting young, value-orientated customers. Since
2006, boohoo has been pushing boundaries to bring its customers
up-to-date and inspirational fashion, 24/7. boohoo has grown
rapidly in the UK and internationally, expanding its offering with
range extensions into menswear, through boohooMAN.
In early 2017 the Group extended its customer offering through
the acquisitions of the vibrant fashion brand PrettyLittleThing,
and free-thinking brand Nasty Gal. In March 2019 the Group acquired
the MissPap brand, in August 2019 the Karen Millen and Coast brands
and in June 2020 the Warehouse and Oasis brands, all complementary
to the group's scalable multi-brand platform. United by a shared
customer value proposition, our brands design, source, market and
sell great quality clothes, shoes and accessories at affordable
prices. These investment propositions have helped us grow from a
single brand, into a major multi-brand online retailer, leading the
fashion eCommerce market for 16 to 40-year-olds with a global
presence. As at 29 February 2020, the Group had just under 14
million active customers across all its brands around the
world.
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END
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