Boohoo Faces Shareholder Revolt Over Executive Pay As Frasers Group Increases Pressure

Boohoo is bracing for a tense encounter at its upcoming shareholder meeting, following calls from two major advisory groups urging investors to reject its executive pay policy. This online fashion retailer, now positioning itself under the Debenhams brand, has come under the spotlight after accusations of inadequate transparency regarding a more than £2m bonus for chief executive Dan Finley.

Both Institutional Shareholder Services ISS and Glass Lewis, widely recognised authorities advising on corporate governance, have recommended shareholders vote against Boohoo’s remuneration report. ISS highlighted the lack of confirmation over whether Mr Finley’s substantial cash and share bonus directly replaced rewards forfeited in his previous role. Mr Finley, who took the reins at Boohoo last November from his previous position leading Debenhams, is a pivotal figure in Boohoo’s efforts to rejuvenate the business by centring Debenhams and moving away from younger-facing fashion labels such as PrettyLittleThing.

The scrutiny does not stop with Mr Finley. ISS flagged further concerns about other executive bonuses issued without proper performance criteria. Meanwhile, Glass Lewis expressed apprehension over the use of discretionary awards, suggesting such bonuses indicate insufficient commitment from the board to ensure executive incentives are truly linked to performance. They noted that incentives should not simply reward standard executive functions, such as closing deals or acquisitions.

Shareholder disquiet has intensified in the wake of moves by Boohoo’s largest investor, Mike Ashley’s Frasers Group, which recently attempted to oust chairman Tim Morris. This followed allegations that the chairman prioritised a costlier loan deal over investor interests, prompting Frasers to demand a vote on Mr Morris’s position. The backdrop to this dispute is a protracted battle for influence, including Mr Ashley’s unsuccessful bid last year to become Boohoo chief executive after a disastrous five-year period that saw the retailer’s share price plummet nearly 90 percent.

Boohoo’s latest results have compounded shareholder frustration, announcing losses of £348m for the previous year and admitting to what bosses called a sustained period of unsatisfactory performance. The company’s board, defending its pay packages, stated that remuneration aims to attract and retain leadership capable of delivering a long-term turnaround. Yet, despite reassurances, advisory groups’ reservations about discretionary remuneration remain, and investor dissatisfaction continues to grow.

Boohoo must now demonstrate not only how it intends to restore shareholder value but also how it will regain investor trust in its governance, as scrutiny from institutional investors and prominent shareholders such as Frasers Group shows no signs of abating.