Boohoo has bowed to pressure from shareholders and linked a £150m bonus scheme for its top managers to improvements in conditions at the factories it uses.
The company said that the board would have the power to reduce the pay out to 15 key managers, including co-founders Carol Kane and Mahmud Kamani, if the group’s Agenda for Change programme was not implemented in full. The changes include establishing a whistleblowing system and responsible sourcing plan as well as publishing the names of all factories used by Boohoo worldwide.
Under the controversial scheme introduced last year, Kamani and Kane are both due to receive £50m, a third each of the total bonus, if Boohoo’s market valuation – at £4bn currently – reaches just over £7.5bn by June 2023.
The committee also appeared to admit that it had been wrong to implement the expensive bonus scheme last year without seeking approval from shareholders, a move which broke the UK corporate governance code. While there was no requirement to seek approval, according to the committee, it said: “With hindsight, we recognise that it would have been more consistent with our philosophy of transparency and shareholder openness to seek shareholder approval before implementing the plan.”
A separate bonus scheme for the chief executive John Lyttle, under which he will receive a £50m bonus if the company’s market value reaches £6bn by 2024, and directors’ annual bonus scheme have also been linked to improvements in dealings with suppliers.
On Wednesday, Boohoo’s remuneration committee said that comments from shareholders had been “instrumental in informing the changes that we have made” and it would continue to keep remuneration under review.
Boohoo promised to improve conditions in the supply chain feeding its online retail empire last year after revelations about poor pay and conditions particularly in Leicester where the group sources about 40% of its fashions.
The overhaul of Boohoo’s supply chain is being monitored by advisory firm KPMG and the retired judge Sir Brian Leveson.
The group published a full list of the UK clothing manufacturers it works with in March after severing ties with hundreds of companies following a damning review last year of its supply chain by Alison Levitt QC in 2020. It is due to publish details of its overseas suppliers in September.
