REG - boohoo group plc - Growth Share Plan
16/02/2023 07:00
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RNS Number : 0775Q boohoo group plc 16 February 2023
For Immediate Release 16 February 2023
boohoo group plc
("boohoo" or the "Company")
Growth Share Plan
The Remuneration Committee of boohoo group plc (AIM: BOO) announces the
intention to adopt a new growth plan (the "Growth Plan"), subject to
shareholder approval.
Background and Rationale
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, despite the strong efforts of
boohoo's Executive and Senior Management. As a result, it is the view of the
Remuneration Committee that there is little or no value in the existing Growth
Share Plan (introduced for the CEO in 2019) (the "2019 Growth Share Plan") or
the current Management Incentive Plan (introduced in 2020) (the "2020
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.
The Remuneration Committee therefore considers that the introduction of the
Growth Plan will drive long-term sustainable growth and rebuild shareholder
value while enabling the retention and motivation of significant core talent
and the wider employee population.
The Growth Plan has been the subject of an extensive shareholder consultation
process with a number of the Company's largest shareholders conducted by the
Chairman of the Remuneration Committee. This exercise provided valuable
feedback which has been taken on board in finalising the terms of the Growth
Plan.
The Growth Plan is designed to focus solely on creating shareholder value
through a series of distinct, stretching share price hurdles. Value will be
received under vested awards on a subsequent anniversary of each share price
hurdle being achieved, subject to an individual participant's continued
employment over this subsequent period (or their having become a "Good
Leaver").
The awards will be divided into five tranches, each subject to a performance
condition whereby a distinct 90-day average share price hurdle must be
achieved within an overall five-year measurement period from the date of
grant.
On the basis of full utilisation and full vesting, the Growth Plan will result
in a maximum dilution of approximately 6.06% for existing shareholders. To
achieve full vesting across all five price hurdles, the Company's market
capitalisation will be required to reach a minimum of £5.0 billion, creating
implied shareholder value of around £4.4 billion over the term of the Growth
Plan. At a £5.0 billion market capitalisation, the Company's share price will
be approximately £3.95, a 747% increase on the last closing share price of
46.65p or representing a minimum 53% CAGR over the term of the proposed plan.
The number of awards issued during the measurement period and the associated
boohoo share price hurdles are set such that the maximum value of awards under
the Growth Plan will, as at the date of the performance conditions being
achieved, be £175.0 million.
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. The Company has
a proud entrepreneurial heritage, having always encouraged and enabled
significant levels of employee share ownership. This scheme extends this
principle, delivering more accountability and further alignment with our
broader shareholder base."
Mahmud Kamani, Executive Chairman of boohoo, commented:
"I wholeheartedly endorse the Remuneration Committee's proposed Growth Plan,
designed to rebuild very substantial shareholder value within the next five
years. While these are extremely ambitious targets in a changed world, in my
view as Executive Chairman and the Company's largest shareholder it's
absolutely the right thing to do to align the interests of the management team
and all of our hardworking colleagues with those of all of our shareholders."
The key terms of the Growth Plan are summarised below:
Tranche 1(3) Tranche 2(3) Tranche 3 Tranche 4 Tranche 5
Hurdle boohoo share price 95p 158p 237p 316p 395p
Implied market cap £1.2bn £2.0bn £3.0bn £4.0bn £5.0bn
Award size as at the date of the performance condition being achieved¹ £17.5m £25.0m £37.5m £40.0m £55.0m
Cumulative award size as at the date of the performance condition being £17.5m £42.5m £80m £120m £175m
achieved¹
Implied shareholder value created over term of plan £0.6bn £1.4bn £2.4bn £3.4bn £4.4bn
Dilution per tranche(1,2) 1.46% 1.25% 1.25% 1.00% 1.10%
Cumulative dilution(1,2) 1.46% 2.71% 3.96% 4.96% 6.06%
1 Assuming the whole tranche is awarded and subsisting
2 Calculated using the hurdle boohoo share price based on boohoo's current
issued share capital
3 Carol Kane will not participate in any award from either tranche 1 or
tranche 2
Once the performance condition for each tranche has been achieved, the awards
will vest on a subsequent anniversary subject to an individual participant's
continued employment (or an individual participant having become a "Good
Leaver") over the intervening period of time, and assuming no earlier change
of control of the Company, as set out below:
● Tranches 1 and 2 will vest on the first anniversary of the achievement
of the relevant share price performance condition.
● Each of tranches 3, 4 and 5 will vest on the third anniversary of the
achievement of the relevant share price performance condition.
● Any vesting periods which have not come to an end by the fifth
anniversary of the date of grant will continue for a maximum of a further 12
months.
During any period between a performance condition having been achieved and the
end of the relevant vesting period for that tranche, the value of related
awards will increase or decrease in line with the performance of the Company's
share price, thereby aligning participants with shareholder experience.
The above vesting periods will end sooner than these dates upon a change of
control of the Company by virtue of a takeover or statutory scheme of
arrangement. The price per share at which any relevant change of control
occurs will be deemed to have been the 90-day average for the purpose of
determining vesting against applicable tranche hurdles. Where that price per
share is between two hurdles, awards will be treated as vesting at the level
of the higher hurdle but with the award size scaled back pro-tanto.
Awards will be settled in shares, which will be newly issued by the Company or
transferred out of treasury/the boohoo.com plc Employee Benefit Trust.
Eligible participants in the Growth Plan have cancelled their participation in
the 2019 Growth Share Plan and the 2020 Management Incentive Plan. As a
result, John Lyttle has disposed of his shareholding of A ordinary shares in
boohoo holdings limited ("BHL"), an intermediary holding company of the Group,
to the Company for £1 in total and Carol Kane has disposed of her
shareholding of B ordinary shares in BHL to the Company for £1 in total.
Mahmud Kamani and Neil Catto have also each disposed of their shareholdings of
B ordinary shares in BHL to the Company for £1 in total. Relevant directors'
dealing disclosures are contained at the end of this announcement.
The Circular (as defined below) will contain full details of the Growth Plan.
Related Party Transactions
Subject to shareholder approval at the General Meeting, awards under the
Growth Plan have been made to the following individuals, each of whom is
considered a related party within the meaning of the AIM Rules for Companies.
These awards (as detailed below) (the "Related Party Awards") each constitute
a related party transaction.
Participant Maximum potential award under the Growth Plan
John Lyttle £50.0m
Shaun McCabe £25.0m
Carol Kane(1) £20.0m
Samir Kamani £12.5m
1 Carol Kane will not participate in any award from either tranche 1 or
tranche 2
The Independent Directors, being Brian Small, Iain McDonald and Tim Morris
(who each also sit on the Remuneration Committee) and Kirsty Britz and Neil
Catto, consider, having consulted with the Company's Nominated Adviser, Zeus
Capital Limited ("Zeus"), that the terms of the Related Party Awards are fair
and reasonable insofar as the Company's shareholders are concerned. In
providing advice to the Independent Directors, Zeus has taken into account the
following:
· the maximum dilution of 6.06% under the Growth Plan;
· the stretching targets ranging up to an implied market capitalisation
of over £5.0 billion;
· that the terms of the Growth Plan have been the subject of a
shareholder consultation process;
· that eligible participants in the Growth Plan have cancelled their
participation in the 2019 Growth Share Plan and the 2020 Management Incentive
Plan;
· that the adoption of the Growth Plan and the grant of awards under it are
conditional on shareholder approval; and
· the commercial assessments of the Independent Directors.
General Meeting
There is no legal or regulatory requirement for shareholder approval to be
sought in relation to the adoption of the Growth Plan or the grant of awards
under it, however, the Company is voluntarily seeking shareholder approval as
a matter of good corporate governance.
A Circular and Notice of General Meeting (the "Circular") will be made
available to shareholders on the Company's website (www.boohooplc.com
(http://www.boohooplc.com/) ) shortly. Shareholders will be sent a
notification, either in hard copy or by email, when the Circular is available
to view online. Additionally, the Circular will be posted to shareholders who
have elected to received printed shareholder communications.
At the General Meeting shareholder approval will be sought for an ordinary
resolution to approve the Growth Plan on the terms as set out in the Circular.
It is intended that the General Meeting will be held in early March 2023.
Enquiries
boohoo group plc
Alistair Davies, Investor Relations Tel: +44 (0)161 233 2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289 5520
Mark Mochalski, Investor Relations Tel: +44 (0)20 3239 6289
Zeus - Nominated adviser and joint broker
Andrew Jones / James Edis / Dan Bate Tel: +44 (0)161 831 1512
Benjamin Robertson Tel: +44 (0)20 3829 5000
Jefferies - Joint broker
Ed Matthews Tel: +44 (0)20 7029 8000
Harry Le May Tel: +44 (0)20 7029 8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth / Toto Berger / Verity Parker Tel: +44 (0)20 7466 5000
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and innovative global
brand targeting young, value-orientated customers, pushing boundaries to bring
its customers up-to-date and inspirational fashion, 24/7.
In 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. In January 2021,
the group acquired the intellectual property assets of Debenhams, with the
goal of transforming a leading UK fashion and beauty retailer into a digital
department store and marketplace through a new capital-light and low-risk
operating model. In February 2021, the group acquired the intellectual
property assets of UK brands Dorothy Perkins, Wallis and Burton. As at 31
August 2022, the boohoo group had 19 million active customers across all its
brands around the world.
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and innovative global
brand targeting young, value-orientated customers, pushing boundaries to bring
its customers up-to-date and inspirational fashion, 24/7.
In 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. In January 2021,
the group acquired the intellectual property assets of Debenhams, with the
goal of transforming a leading UK fashion and beauty retailer into a digital
department store and marketplace through a new capital-light and low-risk
operating model. In February 2021, the group acquired the intellectual
property assets of UK brands Dorothy Perkins, Wallis and Burton. As at 31
August 2022, the boohoo group had 19 million active customers across all its
brands around the world.
Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them.
1 Details of the person discharging managerial responsibilities / person closely
associated
a) Name i. John Lyttle
ii. Mahmud Kamani
iii. Carol Kane
iv. Neil Catto
2 Reason for the notification
a) Position/status i. Chief Executive Officer
ii. Executive Chairman and Co-Founder
iii. Executive Director and Co-Founder
iv. Executive Director
b) Initial notification /Amendment Initial notification
3 Details of the issuer, emission allowance market participant, auction
platform, auctioneer or auction monitor
a) Name boohoo group plc
b) LEI 213800SZF3KFCECWY243
4 Details of the transaction(s): section to be repeated for (i) each type of
instrument; (ii) each type of transaction; (iii) each date; and (iv) each
place where transactions have been conducted
a) Description of the financial instrument, type of instrument i. A ordinary shares of £0.001 each in boohoo holdings
limited
ii. B ordinary shares of £0.001 each in boohoo holdings
limited
iii. B ordinary shares of £0.001 each in boohoo holdings
limited
Identification code
iv. B ordinary shares of £0.001 each in boohoo holdings
limited
ISIN: JE00BG6L7297
b) Nature of the transaction i. Disposal of A ordinary shares in boohoo holding limited to
boohoo group plc as a result of cancelling participation in the 2019 Growth
Share Plan
ii. Disposal of B ordinary shares in boohoo holding limited to
boohoo group plc as a result of cancelling participation in the 2020
Management Incentive Plan
iii. Disposal of B ordinary shares in boohoo holding limited to
boohoo group plc as a result of cancelling participation in the 2020
Management Incentive Plan
iv. Disposal of B ordinary shares in boohoo holding
limited to boohoo group plc as a result of cancelling participation in the
2020 Management Incentive Plan
c) Price(s) and volume(s) Price No. of shares
i £1.00 in total 1,397
ii £1.00 in total 1,950
iii £1.00 in total 1,950
iv £1.00 in total 390
d) Aggregated information Price No. of shares
i £1.00 1,397
- Aggregated volume ii £1.00 1,950
iii £1.00 1,950
- Price iv £1.00 390
e) Date of the transaction i. 15 February 2023
ii. 15 February 2023
iii. 15 February 2023
iv. 15 February 2023
f) Place of the transaction i. Off market
ii. Off market
iii. Off market
iv. Off market
d)
Aggregated information
- Aggregated volume
- Price
Price No. of shares
i £1.00 1,397
ii £1.00 1,950
iii £1.00 1,950
iv £1.00 390
e)
Date of the transaction
i. 15 February 2023
ii. 15 February 2023
iii. 15 February 2023
iv. 15 February 2023
f)
Place of the transaction
i. Off market
ii. Off market
iii. Off market
iv. Off market
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