£50m Astounding bonus deal for new boss of fashion upstart Boohoo
ThE new boss of Boohoo is in line for a bonus of up to £50m after he was poached from rival Primark.
Boohoo, which was founded in Manchester in 2006, has already seen its value jump by more than 250pc since it listed for 50p a share in 2014. it is now worth nearly £2bn, almost 14 times the value of Debenhams.
The AiM-listed business blossomed amid soaring demand for so-called fast fashion among 16 to 24 year olds, with sales now expected to reach £1bn by 2020.
lyttle will get a basic salary of £615,000 and pension contributions of £30,750 a year as well as an annual bonus worth up to £922,500 – a total of nearly £1.6m.
Under Boohoo’s growth share plan, lyttle could rake in £50m if Boohoo’s value increases by £3.6bn within five years of his starting date. if he is successful in boosting the store by that much, it would make him one of the best-paid bosses in retail.
luke hildyard, a director of the high Pay Centre, said: ‘There has been widespread anger at executive pay awards that typically run to about £4m or £5m, so potential payments in the tens of millions are particularly controversial.
‘Companies who have used similar pay structures in the past, including Persimmon, Melrose and gVC holdings, have attracted a lot of criticism from policymakers and investors.
‘There’s a lot of research that suggests huge pay awards don’t really incentivise or motivate executives. Executives are not necessarily the most important drivers of company performance and the vast differences in pay between business leaders and their workers negatively affects organisational morale.’
The company’s co-founders Mahmud Kamani and Carol Kane will stay on after lyttle joins in March next year. Kamani, 54, will step up to become executive chairman taking over from Peter Williams while Kane, 51, will be an executive director in charge of the retailer’s brand strategy.
Boohoo’s success with young shoppers looking to snap up the latest fashions at a cut-price has propelled both Kamani and Kane into the ranks of the UK’s richest.
The Kamani family, which own around 30pc of the company, are now worth £1bn after making £286m from share sales alone since it listed. Kamani is married with three grown-up sons, two of whom co-founded fashion retailer Pretty little Thing which is now owned by Boohoo. his brother Jalal is trading director.
Former designer Kane, who lives with her husband and four Jack Russell dogs, is worth £120m and joined the sunday Times Rich list this year. she has a 4pc stake in Boohoo.
The irish businessman started his career at the age of 19 at Primark working as a trainee store manager. he worked his way up to head of buying before joining sir Philip green’s retail empire Arcadia group as buying director. he worked at Matalan for five years as trading director before returning to Primark where he has been chief operating officer since 2010. he lives in sevenoaks in Kent with his wife and has three children aged 21, 19 and 16. During his time at Primark sales have grown by 158pc to more than £7bn, while profits have rocketed 116pc to £735m.
greg lawless, analyst at shore Capital, said: ‘This is a very solid appointment and signals that the group is positioning for the next phase of growth for international expansion. The company has appointed a retailer with real clothing pedigree.’
however, some questioned lyttle’s credentials in online retailing. Katie Thomas, partner at executive search firm Ridgeway Partners, said: ‘The only unknown is that he hasn’t worked in a digital model and Primark isn’t an online retailer – that’s probably the main question.
‘ But he has brought other skills. he has a background in merchandising and planning, and can help them develop systems and processes around their business model.’