BusinessCantillon

Vale of tears for Boohoo executives

Talk of engagement with disillusioned shareholders likely to bring them face-to-face with stakebuilding Mike Ashley

BooHoo founder Carol Kane with chief executive John Lyttle: company directors are feeling the heat from shareholders. Photograph: Dara Mac Dónaill

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Cantillon
Sun Jun 23 2024 - 06:00

The challenging times continue for John Lyttle, the Offaly-born chief executive of fast fashion company Boohoo, which has been the subject of regulatory, media and shareholder scrutiny over the last few years, most prominently because of allegations of forced labour in its supply chain.

Shareholders have been testy throughout that difficult period, not helped by the company’s struggling financial performance. A particular bugbear has been the very generous bonus schemes for its executive directors — Lyttle and the company’s founders Mahmud Kamani and Carol Kane.

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The scale of that frustration emerged this week when the company published results of voting at its annual general meeting, where it suffered a sizeable protest vote against two of its resolutions.

More than 16 per cent of shareholders voted against the proposed re-election of non-executive Iain McDonald, who has also been a lightning rod for some shareholder disaffection.

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Meanwhile, nearly 15 per cent voted against the company’s directors’ remuneration report.

Neither of those votes is high enough to block the resolution from passing but they’re very high-profile and substantial protest votes. A significant group of investors is still not satisfied with the company’s handling of their very robustly expressed misgivings.

In May, the company felt it necessary to withdraw a proposal related to share-based remuneration for Lyttle, Kamani, and Kane. At the time, the three executive directors said they had “opted to waive their entire bonus entitlement for the financial year ended February 29th, 2024″.

In that announcement, the company said it would “consider further engagement with shareholders on this matter in the future”. That likely means interesting times ahead because one of those shareholders is Mike Ashley, the colourful king of the high street and the chief executive of Frasers Group, through which he owns the House of Fraser department store and his Sports Direct chain of shops.

Ashley has been quietly but very steadily increasing his stake in Boohoo over the last year, spending close to £90 million in building up a 24 per cent holding, which is worth nearly £104 million at the current share price.

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