Boohoo Group PLC (AIM:BOO) said its remuneration committee intends to adopt a new growth share plan which involves awards to shareholders should the online retailer reach a £5bn market cap.
According to a statement, the new growth plan is designed solely to create shareholder value through distinct, stretching share price hurdles.
Shareholders will receive value under vested awards on the subsequent anniversary of each share price hurdle being achieved.
The online retailer said the awards are divided into five tranches, whereby a distinct 90-day average price hurdle must be achieved within an overall five-year measurement period.
The first tranche requires the share price to reach 95p, with an implied market cap of £1.2bn, which would result in shareholder value creation of £600mln and an award size of £17.5mln.
The final tranche requires the share price to reach 395p, with an implied market cap of £5bn, which means shareholders would have created £4.4bn of value and receive a £55mln award.
If all five tranches are achieved, shareholders should receive a cumulative award of £175mln over five years.
“While these are extremely ambitious targets in a changed world, in my view as executive chairman and the company's largest shareholder it's absolutely the right thing to do to align the interests of the management team and all of our hardworking colleagues with those of all of our shareholders,” said executive chairman Mahmud Kamani.
Boohoo’s remuneration committee said it has taken the decision to upgrade the plan as there was “little to no value” in the existing model, with the group's market cap significantly decreasing over the last three years.