Boohoo will link executive bonuses with resolving its supply chain issues after poor working conditions were uncovered in Leicester.
In its annual report the online retailer said long-term bonuses outlined in its Management Incentive Programme (MIP) would be linked to the implementation of its Agenda for Change programme, following pressure from the government's Environmental Audit Committee (EAC).
The MIP, which would see executives in line for a £150m bonus if shares rose by two-thirds over a three-year period, was launched in June 2020. Under the programme, Boohoo’s co-founders Mahmud Kamani and Carol Kane, were due to each receive £50m.
Iain McDonald, chair of Boohoo’s remuneration committee, said: “We have reviewed the MIP in light of the supply chain issues raised over the course of the financial year. Whilst we ultimately believe that the full resolution (or otherwise) of these issues will be reflected in long-term share price performance (and thus have an impact on the value of awards) we have also agreed with participants to add a new nonfinancial performance condition.”
The remuneration committee is made up of non-executive directors.
“Under this new target, the committee must be satisfied that the Agenda for Change programme has been successfully implemented over the three-year performance period before the vesting of any MIP awards.”
The Agenda for Change programme is centred around the implementation of recommendations in Alison Levitt's review, published in September 2020 after labour abuses were found in the retailer's supply chain in Leicester.
“In the event of the committee determining that the Agenda for Change programme has not been successfully implemented in full, we will have the ability to reduce the level of vesting of awards, irrespective of the share price growth achieved over the performance period,” MacDonald added.
In March, EAC chair Philip Dunne called on Boohoo to “put its money where its mouth is” and link multi-million pound bonuses to the achievement of ethical and environmental pledges.
This followed Kamani’s appearance before the committee in December. The EAC said his comments given in the evidence session “did little to dispel the impression that the company has been focused on rapid growth regardless of the social or environmental costs”.
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