REG - Boohoo Group Plc - Group Turnaround Scheme

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RNS Number : 1895J  Boohoo Group Plc  27 November 2025

 
 

 

 

boohoo group plc

 

("Debenhams Group", "Debenhams" or the "Company")

 

Group Turnaround Scheme

 

The Remuneration Committee of Debenhams Group (DEBS.L) (the "Committee")
announces a new growth share arrangement, the Group Turnaround Scheme (the
"GTS").

 

Background and Rationale

 

Following the appointment of the new management team, the Committee has
undertaken a comprehensive review of the Debenhams Group's remuneration policy
to ensure it is fair, appropriate and closely aligned with Debenhams'
multi-year turnaround strategy.  The Debenhams Group's existing long term
incentive schemes based on the performance of the whole Debenhams Group do not
include Dan Finley (CEO) and Phil Ellis (CFO) (the "Executives"). Accordingly,
the Committee has determined that these legacy schemes no longer incentivise
the individuals that are fundamental to the Debenhams Group's future success
and is proposing to replace participation in these schemes with the GTS.

The GTS has been designed to be a strong incentive for the Executives and
certain other members of the senior management team (the "Participants") to
execute the turnaround strategy over the coming years and consequently restore
profitability and unlock value for all shareholders.

Significant progress has already been made by the new leadership team to
stabilise the business and position it to take advantage of opportunities.
£41.6m Adjusted EBITDA was reported for FY25, which reflected not only the
stand-out performance of Debenhams but also the decisive actions taken by the
new leadership team. The new leadership team have been instrumental in
deleveraging the business following the completion of an oversubscribed equity
raise of £39m in December 2024, the sale of non-core property assets enabling
early payment of the Debenhams Group's previous term loan and the successful
completion of a new 3-year finance facility of up to £175m, more than 12
months ahead of maturity. Whilst progress has been made, the new leadership
team have embarked upon a focused, multi-year turnaround strategy to restore
profitability and unlock value and, as such, the GTS is intended to retain and
incentivise the management team to deliver.

The Company has conducted a shareholder consultation process with respect to
the GTS with a number of the Company's shareholders, representing 36% of the
voting rights. This exercise has provided valuable feedback which has been
taken on board in finalising the terms of the GTS, which have been approved by
the Committee.

Corporate Governance Considerations

Debenhams notes that its Board has previously stated publicly that, having
taken advice from Zeus Capital Limited, its Nominated Adviser, seeking
shareholder support for management incentive schemes of this nature is
consistent with its corporate governance aims. Debenhams has adhered to this
principle in the adoption of each of its legacy executive schemes since June
2020 ("Previous Schemes") by requiring the adoption of those schemes to be
subject to shareholder approval at a general meeting.

However, after careful consideration, the Board has concluded that making the
adoption of the GTS conditional on shareholder approval at a general meeting
would not be most likely to promote the success of the Company for the benefit
of its shareholders as a whole.

The principal reasons for this are as follows:

·     there is no requirement under relevant company law or the AIM
Rules to obtain shareholder approval before implementing the GTS;

·     the Committee has carefully considered the structure of the GTS
and, through the stretching growth targets and duration of the plan, sought to
ensure it retains and incentivises management to drive sustained share price
growth;

·     the swift adoption of the GTS ensures that the senior managers
(and most importantly the Executives) will be incentivised to deliver very
significant share price growth as the Debenhams Group executes its strategy
under the leadership of the Executives. As outlined above, significant
progress has already been made by the new leadership team which has had a
positive impact on the Debenhams Group's overall performance. As a result, the
Committee believes implementing the GTS without delay is fundamental to
maintaining this upward trajectory and enabling the Participants to solely
focus on executing the turnaround strategy and creating value for all
shareholders;

·     the Company has undertaken shareholder consultation with a number
of its key shareholders and taken on board feedback received; and

·     a major competitor who is a significant shareholder of Debenhams
continues to seek to disrupt the Debenhams Group's growth strategy and
operations rather than maximise its future success; at the Debenhams general
meeting on the 28 March 2025, it voted against a simple resolution to change
the Company's corporate name and at the annual general meeting on 19 September
2025 it voted against customary resolutions regarding dis-application of
pre-emption rights, which are regularly recommended by boards as being in the
best interest of all shareholders.  Accordingly, the Committee has concluded
that, despite Debenhams continuing to believe in maintaining good standards of
corporate governance throughout the business, seeking to consult with the
wider shareholder base or seeking shareholder approval for the GTS at a
general meeting would not be in the best interest of the Company's
shareholders as a whole.

This information is disclosed in accordance with AIM Rules 10 and 11.

Structure of the Growth Plan

The GTS is structured in such a way that it delivers an aggregated 6 per cent.
of the growth in the market capitalisation of Debenhams to the extent that
such increase is attributable to the share price increasing between £0.35 per
share (the "Floor Price") (c. 3.0x the current price per share) and £3.00 per
share (the "Cap Price") (c.25.9x the current share price) during the 5-year
period that the GTS is in operation.

The GTS is subject to three measurement dates, one 3 years after commencement
of the plan which is todays date, one 4 years after commencement of the plan
and one 5 years after commencement of the plan (together, the "Measurement
Dates"). On all Measurement Dates, the vesting price will be determined by
reference to the trailing 30-day average closing share price and, provided the
vesting price exceeds the Floor Price, Participants will be entitled to
receive the growth in the market capitalisation of Debenhams between the Floor
Price and the Cap Price. The amount of the GTS that shall be capable of
vesting on each Measurement Date shall be limited to one-third of the
aggregate of the total awards made under the GTS and all awards that vest on
the first and second Measurement Dates shall each be subject to hold periods
of 12 months.

On the basis of full utilisation and full vesting, the GTS will result in a
maximum dilution of c.5% for existing Shareholders. To achieve full vesting,
the Company's market capitalisation will be required to reach c.£4.2 billion,
representing a share price of £3.00 per share; based on the Company's last
closing share price of 10.5 pence, this would represent a (i) c.25.9x increase
in share price and (ii) a minimum 92% CAGR. The number of awards issued during
the measurement period and the associated Debenhams share price hurdles are
set such that the maximum value of awards of the GTS will be c.£222 million
if the Share Price is at or above £3.00 at each of the three Measurement
Dates.

Assuming the whole GTS is awarded in full, the key terms of the GTS are
summarised below.

 Illustrative share price (£)                                                  £0.35   £0.60   £0.80   £1.00   £1.20                 £1.50                 £3.00
 Multiple of current share price                                               3.0x    5.2x    6.9x    8.6x    10.3x                 12.9x                 25.9x
 Implied Market Cap (£m)                                                       489     838     1,118   1,397   1,677                 2,096                  4,192
 Award size at the illustrative share price as at the date of the performance  -       21.0    37.7    54.5    71.3                  96.4                  222.2
 condition being achieved (£m)
 Implied shareholder value created over term of the plan (£m)                  327     676     956     1,235           1,515                 1,934                 4,030
 Dilution per tranche                                                          -       2.4%    0.8%    0.5%    0.3%                  0.3%                  0.6%
 Cumulative dilution                                                           -       2.4%    3.3%    3.8%    4.1%                  4.4%                  5.0%

 

The above vesting periods will end sooner than the stated Measurement Dates
upon a change of control of the Company by virtue of a takeover or statutory
scheme of arrangement or a Substantial Shareholder Event having occurred. A
"Substantial Shareholder Event" will occur where a shareholder who holds more
than 25% of the shares in the Company (from time to time) has appointed a
nominee to the Board of the Company (other than following a change of
control). The price per share at which any relevant change of control or
Substantial Shareholder Event occurs will be deemed the relevant price for the
purpose of determining vesting.

Awards will be settled in shares, which will be newly issued by the Company.

The GTS has customary leaver provisions and clawback provisions for all
participants.

An individual who participates in the GTS will not also participate in the
Debenhams Incentive Plan and the 2023 Growth Share Plan.

Mahmud Kamani will not participate in the GTS, the Debenhams Incentive Plan or
the 2023 Growth Share Plan.

Related Party Transactions

The Executives will participate in the GTS and will be allocated growth shares
equivalent to a participation in the GTS in approximately the following
proportions:

 Director                             Percentage of the GTS  Maximum potential award under the GTS (on basis the share price is at, or
                                                             above £3.00 at each of the three Measurement Dates)
 Dan Finley, Chief Executive Officer  66.67%                 £148.1m
 Phil Ellis, Chief Financial Officer  6.67%                  £14.8m

 

Dan Finley and Phil Ellis are related parties as defined by the AIM Rules for
Companies ("the AIM Rules") given they are Directors of the Company and the
grant of shares to each of them under the GTS (the "Related Party Awards")
will therefore be a related-party transaction for the purposes of Rule 13 of
the AIM Rules.

The independent directors being Iain McDonald, John Goold and Tom Handley (who
each also sit on the Committee), Tim Morris, Kirsty Britz, Mahmud Kamani and
Carol Kane consider, having consulted with Zeus Capital, Debenhams Group's
Nominated Adviser, that the terms of the Related Party Awards are fair and
reasonable insofar as the Company's shareholders are concerned.

In their considerations regarding the Related Party Awards, the Independent
Directors:

•            have taken into account the maximum dilution of c.5.0%
under the GTS and the stretching targets ranging up to an implied market
capitalisation of over £4.0 billion;

•            have taken into account that the terms of the GTS have
been the subject of a shareholder consultation process; and

•            believe it is appropriate to implement this scheme
without delay and without shareholder approval being sought to ensure the
Executives are incentivised to deliver shareholder value immediately.

 

 Enquiries
 Debenhams Group
 Phil Ellis, Chief Financial Officer       Tel: +44 (0)161 233 2050

 Zeus Capital - Nominated Advisor and Joint Broker
 Dan Bate / James Edis                     Tel: +44 (0)161 831 1512
 Benjamin Robertson                        Tel: +44 (0)20 3829 5000

 Panmure Liberum - Joint Broker                                 Tel: +44 (0)20 3100 2000
 Mark Dickenson/ James Sinclair-Ford/ Shalin Bhamra

 Sodali & Co - Financial PR Adviser
 Ben Foster / Louisa Henry                                      Tel: +44 (0)20 3984 0114

 

About Debenhams Group

Debenhams Group is an online platform, for fashion, home, and beauty, serving
millions of customers across five shopping destinations: Debenhams, Karen
Millen, boohoo, MAN and PLT. Debenhams Group dates back to 1778 when William
Clark, a retail pioneer of the time, opened the UK's first department store.
Today, the Group is home to Debenhams, Britain's online department store and
leading fashion-led marketplaces, boohoo, PLT, MAN, and Karen Millen.

 

 

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