The Boohoo Group PLC (LON: BOO) share price edged 4.27% after unveiling a new growth share plan for its executive as the previous plans announced for the CEO in 2019 and the management team in 2020 was no longer applicable due to the decline in the company’s share price over the past three years.
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The new growth share plan for the company’s executives is based on the company’s current share price and sets progressive goals for the management team. The team will be rewarded once they cross each threshold, with the ultimate goal of rebuilding the fashion retailer’s market capitalisation to £5.0 billion.
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The fast fashion retailer wants to motivate its top executives with reachable goals, given their crucial role in driving business performance and delivering boohoo's strategic objectives. Therefore, the company’s remuneration committee devised a five-tiered share award program to motivate the management team to create shareholder value.
Boohoo’s new plan will see the executives receive shares worth £17.5 million when the company’s share price hits 95p, translating into a £1.2 billion valuation. The second award will come when the company’s share price hits 158p (£2.0 billion), at which point the executives will earn a £25.0 million share award.
The third milestone is set at £3.0 billion, at which point Boohoo’s shares shall be trading at 237p. The fourth award awaits the executives once the fashion retailer’s share price hits 316p, translating into a £4.0 billion market valuation. The fifth and final hurdle is set at a £5.0 billion market cap, at which point Boohoo’s share price should be 395p.
The executives shall earn a £37.5 million payout when they hit the third hurdle, with the figure rising to £40.0 million when they hit the fourth hurdle, and the fifth award is set at £55.0 million. The new growth share plan is based on Boohoo’s current valuation and should provide a bigger incentive to the company’s executives.
Investors muted reaction to today’s announcement indicates a wait-and-see attitude.
*This is not investment advice.
The Boohoo share price edged 4.27% higher to trade at 48.82p, from Wednesday’s closing price of 46.82p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
