What a week it has been for Boohoo Group PLC (AIM:DEBS)investors. The shares have surged, doubling on the back of a much-needed improvement in trading. But the real flashpoint has been the row over a potential £150 million reward for chief executive Dan Finley if he can engineer a Lazarus-style revival of the business, which is now anchored around the Debenhams brand.
The share-based award, tied to some extremely ambitious performance targets, will not be put to a shareholder vote. That decision has reportedly irritated Mike Ashley’s Frasers Group, which owns about 29% of the company.
Boohoo has defended its approach, arguing that a lengthy approval process would slow the business at a crucial moment. Fast-tracking the plan, it says, is the best way to ensure senior leaders are fully focused on delivering what it calls significant share price growth.
In a pointed reference to Frasers, the company said a “major competitor” with a sizeable stake had repeatedly hampered its strategy and day-to-day operations. With that in mind, the board insists that bypassing a vote is the most effective way to protect other investors and get the turnaround plan moving.
The new package (the group turnaround scheme) could deliver around £222 million to the wider management team if the shares reach 300p within five years.
That is a huge stretch, given the stock is trading at roughly 25p, even after a 40% jump on Friday. Peel Hunt has warned that plenty of hard work lies ahead. That feels like an understatement.