TIDMBOO
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 GBP5.0 billion, creating implied shareholder
value of around GBP4.4 billion over the term of the Growth Plan. At
a GBP5.0 billion market capitalisation, the Company's share price
will be approximately GBP3.95, 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 GBP175.0 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 Tranche Tranche Tranche Tranche
1(3) 2(3) 3 4 5
------------------------------ --------- --------- --------- --------- ---------
Hurdle boohoo share
price 95p 158p 237p 316p 395p
------------------------------ --------- --------- --------- --------- ---------
Implied market cap GBP1.2bn GBP2.0bn GBP3.0bn GBP4.0bn GBP5.0bn
------------------------------ --------- --------- --------- --------- ---------
Award size as at GBP17.5m GBP25.0m GBP37.5m GBP40.0m GBP55.0m
the date of the performance
condition being achieved(1)
------------------------------ --------- --------- --------- --------- ---------
Cumulative award GBP17.5m GBP42.5m GBP80m GBP120m GBP175m
size as at the date
of the performance
condition being achieved(1)
------------------------------ --------- --------- --------- --------- ---------
Implied shareholder GBP0.6bn GBP1.4bn GBP2.4bn GBP3.4bn GBP4.4bn
value created over
term of plan
------------------------------ --------- --------- --------- --------- ---------
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 GBP1 in total and Carol Kane has disposed of her
shareholding of B ordinary shares in BHL to the Company for GBP1 in
total.
Mahmud Kamani and Neil Catto have also each disposed of their
shareholdings of B ordinary shares in BHL to the Company for GBP1
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 GBP50.0m
--------------- ------------------------
Shaun McCabe GBP25.0m
--------------- ------------------------
Carol Kane (1) GBP20.0m
--------------- ------------------------
Samir Kamani GBP12.5m
--------------- ------------------------
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 GBP5.0 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 ) 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 Tel: +44 (0)20 7466 5000
Parker
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 Initial notification
/Amendment
--------------------- -----------------------------------------------------------
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 i. A ordinary shares of GBP0.001 each in boohoo
of the financial holdings limited
instrument, ii. B ordinary shares of GBP0.001 each in boohoo
type of instrument holdings limited
iii. B ordinary shares of GBP0.001 each in boohoo
holdings limited
iv. B ordinary shares of GBP0.001 each in boohoo
Identification holdings limited
code
ISIN: JE00BG6L7297
--------------------- -----------------------------------------------------------
b) Nature of the i. Disposal of A ordinary shares in boohoo holding
transaction 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 Price No. of shares
volume(s) i GBP1.00 in total 1,397
------------------ --------------
ii GBP1.00 in total 1,950
------------------ --------------
iii GBP1.00 in total 1,950
------------------ --------------
iv GBP1.00 in total 390
------------------ --------------
--------------------- -----------------------------------------------------------
d) Aggregated Price No. of shares
information i GBP1.00 1,397
- Aggregated --------- --------------
volume ii GBP1.00 1,950
- Price --------- --------------
iii GBP1.00 1,950
--------- --------------
iv GBP1.00 390
--------- --------------
--------------------- -----------------------------------------------------------
e) Date of the i. 15 February 2023
transaction ii. 15 February 2023
iii. 15 February 2023
iv. 15 February 2023
--------------------- -----------------------------------------------------------
f) Place of the i. Off market
transaction ii. Off market
iii. Off market
iv. Off market
--------------------- -----------------------------------------------------------
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