Boohoo has unveiled a plan to boost its market capitalisation seven-fold over the next five years.
The listed fashion retailer’s value has dipped under £600 million with a current share price of around 47 pence, down from a high of 433p in June 2020. Boohoo floated in early 2018.
The growth plan, which it says will result in a maximum 6.06% dilution for existing shareholders, could see up to £175m in shares awarded to employees. These will be divided into five tranches of 90-day average share price hurdles which will be subject to performance conditions.
To achieve full vesting, the company’s market capitalisation will be required to reach a minimum of £5 billion, creating implied shareholder value of around £4.4bn. At a £5bn market capitalisation, the share price would be around £3.95, a 747% increase on the current price.
The plan is subject to shareholder approval, which will be sought at a meeting in early March.
“Against the background of the unique and unprecedented set of macro-economic and market headwinds experienced over the last three years, boohoo’s market capitalisation has significantly decreased,” said the company.
“It is the view of the remuneration committee that there is little or no value in the existing growth share plan or the current management incentive plan… and they no longer operate as an effective incentive mechanism for this critical population who are responsible for driving business performance and delivering boohoo’s strategic objectives.”
Iain McDonald, chairman of the remuneration committee, commented: “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.
“This is why the plan extends beyond the executive to include additional members of the senior leadership and indeed the wider employee population while acting as a powerful recruitment and incentivisation tool for new joiners.”