Boo = shorters dream10 Apr 2023 11:56
Is there any evidence that management incentive plans actually incentivise management to work even harder or take even better decisions that reward shareholders.
I've looked at the 2019 and 2020 plans for Boohoo management yet despite all that generous incentivisation the shares, have dropped over 80% of there value since then so not really an incentive are they
This paragraph is hilarious "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 "2019Growth 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.”
In simple terms as there is no hope of management getting their fat bonus since there is no hope of hitting prior share price targets they are lowering the goalposts. This is the same management who are predicting double digit revenue declines and no profits until 2026.
They have deceatfully tried to fool investors, read below
“ 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 maximum payout in shares would be 6.06% dilution but as shareholders will be 747% ahead they won’t care. Right? WRONG
Look at the lower payouts. If the management team can get the shares back to just 95p ( i.e. leaving folks nursing losses of only 80% from 2020) the managers pocket a staggering £17.5 million!!!!
At 158p (a loss of just over 60% from 2020) they get another £25 million worth of shares. To get the full payout of £175 million of shares, the share price has to be 395p meaning those who bought at the peak are still out of the money.
The team that claimed credit for Boohoo’s shares going up to 408p, deny responsibility for the shares crashing to 49p and now demand a reward of £175 million for getting the shares back to the level of 3 years ago. That is industrial scale piggery. Or as Boohoo pompously puts it:
“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.”
Outrageous and no wonder there is shareholder revolt in the works
Boohoo losing market share to shein, seeing negative free cash flow, valued at 100x gross profit, increasing its use of debt andwith poor ESG credentials is a shorters dream
Very str
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