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(Alliance News) - boohoo Group PLC on Thursday demanded that Revolution Beauty Group PLC explain why it handed out more than GBP2 million in share awards to its management team without the approval of investors.
The battle between the two retailers reached boiling point after beauty brand Revolution Beauty on Tuesday defied a shareholder vote and reinstated its leadership team. Its shares then returned to trading on AIM on Wednesday, after a suspension in place since September was lifted.
Revolution Beauty's senior management team was subsequently granted free share options to "reward them for the hard work done" and for improving the group's sales, the firm said.
Share options granted to Chief Executive Officer Bob Holt, Chief Financial Officer Elizabeth Lake and 16 other company managers were worth about GBP2.1 million combined, boohoo noted.
boohoo, which is a major shareholder in Revolution Beauty with a 26.6% stake, said shareholders were not consulted over the share awards, which it said will be 3.4% dilutive of existing shareholders.
The online fashion retailer demanded that the full details of the share options be published.
"This all demonstrates a lack of transparency and actions which are self-serving and not in the best interests of shareholders," boohoo said.
The ongoing spat put a spotlight the less-stringent governance standards within the AIM market compared to the London Main Market, PA reported.
Lindsey Stewart, director of investment stewardship research for Morningstar, told PA: "The fight between Boohoo and Revolution Beauty will once again leave investors wondering about governance standards at London's AIM-listed companies, which have often failed to match those of companies listed on the Main Market."
Both trading venues are owned by London Stock Exchange Group PLC.
"The allegations of self-dealing and significant accounting misstatements at Revolution are reminiscent of the failure of Patisserie Valerie almost five years ago.
"And while Boohoo – as owner of over a quarter of Revolution's equity – is quite right to be concerned about the allegations, Boohoo itself (also AIM-listed) has been in the headlines regularly over the years due to deep concerns over its governance arrangements and its oversight of working conditions in its supply chain."
He added that the spat comes at a time when the financial watchdog is consulting to introduce changes to London market's listing rules which will "hand founders and directors more power at the expense of shareholder rights".
Revolution Beauty issued no immediate response to boohoo on Thursday.
However, it separately reported that CEO Holt bought 1.0 million shares on Wednesday at 26 pence each, worth GBP260,000. The shares are his only holding. Non-Executive Chair Derek Zissman bought 100,000 shares on Wednesday at 30.5p and now has 130,000 shares.
Revolution Beauty shares were up 12% to 27.50p on Thursday at midday. The stock had fallen 17% on Wednesday, its first day of resumed trading. boohoo shares were down 1.6% at 33.90p on Thursday.
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