Company Announcements

boohoo group plc

("boohoo" or the "Company")

Growth Share Plan

The Remuneration Committee of boohoo group plc (AIM: BOO) announces the intention to adopt a new growth plan (the "Growth Plan"), subject to shareholder approval.

Background and Rationale

Against the background of the unique and unprecedented set of macro-economic and market headwinds experienced over the last three years, boohoo's market capitalisation has significantly decreased, despite the strong efforts of boohoo's Executive and Senior Management.  As a result, it is the view of the Remuneration Committee that there is little or no value in the existing Growth Share Plan (introduced for the CEO in 2019) (the "2019 Growth Share Plan") or the current Management Incentive Plan (introduced in 2020) (the "2020 Management Incentive Plan"), and they no longer operate as an effective incentive mechanism for this critical population who are responsible for driving business performance and delivering boohoo's strategic objectives.

The Remuneration Committee therefore considers that the introduction of the Growth Plan will drive long-term sustainable growth and rebuild shareholder value while enabling the retention and motivation of significant core talent and the wider employee population.

The Growth Plan has been the subject of an extensive shareholder consultation process with a number of the Company's largest shareholders conducted by the Chairman of the Remuneration Committee. This exercise provided valuable feedback which has been taken on board in finalising the terms of the Growth Plan.

The Growth Plan is designed to focus solely on creating shareholder value through a series of distinct, stretching share price hurdles. Value will be received under vested awards on a subsequent anniversary of each share price hurdle being achieved, subject to an individual participant's continued employment over this subsequent period (or their having become a "Good Leaver").

The awards will be divided into five tranches, each subject to a performance condition whereby a distinct 90-day average share price hurdle must be achieved within an overall five-year measurement period from the date of grant.

On the basis of full utilisation and full vesting, the Growth Plan will result in a maximum dilution of approximately 6.06% for existing shareholders. To achieve full vesting across all five price hurdles, the Company's market capitalisation will be required to reach a minimum of £5.0 billion, creating implied shareholder value of around £4.4 billion over the term of the Growth Plan. At a £5.0 billion market capitalisation, the Company's share price will be approximately £3.95, a 747% increase on the last closing share price of 46.65p or representing a minimum 53% CAGR over the term of the proposed plan. The number of awards issued during the measurement period and the associated boohoo share price hurdles are set such that the maximum value of awards under the Growth Plan will, as at the date of the performance conditions being achieved, be £175.0 million.

Iain McDonald, Chairman of the Remuneration Committee, commented:

"The boohoo group has an outstanding executive team whose ongoing retention is crucial, particularly in an era where the recruitment of such quality is more competitive than ever before. This plan facilitates retention and resolutely aligns our executives' interests with those of shareholders. In designing the plan, we recognised it needed to go deeper into the business than prior schemes while leaving headroom to attract the world-class talent that is essential to the execution of our strategy and growth ambitions. This is why the plan extends beyond the executive to include additional members of the senior leadership and indeed the wider employee population while acting as a powerful recruitment and incentivisation tool for new joiners. The Company has a proud entrepreneurial heritage, having always encouraged and enabled significant levels of employee share ownership. This scheme extends this principle, delivering more accountability and further alignment with our broader shareholder base."

Mahmud Kamani, Executive Chairman of boohoo, commented:

"I wholeheartedly endorse the Remuneration Committee's proposed Growth Plan, designed to rebuild very substantial shareholder value within the next 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."

The key terms of the Growth Plan are summarised below:

1 Assuming the whole tranche is awarded and subsisting
2 Calculated using the hurdle boohoo share price based on boohoo's current issued share capital

3 Carol Kane will not participate in any award from either tranche 1 or tranche 2

Once the performance condition for each tranche has been achieved, the awards will vest on a subsequent anniversary subject to an individual participant's continued employment (or an individual participant having become a "Good Leaver") over the intervening period of time, and assuming no earlier change of control of the Company, as set out below:

●  Tranches 1 and 2 will vest on the first anniversary of the achievement of the relevant share price performance condition.

●   Each of tranches 3, 4 and 5 will vest on the third anniversary of the achievement of the relevant share price performance condition.

●   Any vesting periods which have not come to an end by the fifth anniversary of the date of grant will continue for a maximum of a further 12 months.

During any period between a performance condition having been achieved and the end of the relevant vesting period for that tranche, the value of related awards will increase or decrease in line with the performance of the Company's share price, thereby aligning participants with shareholder experience.

The above vesting periods will end sooner than these dates upon a change of control of the Company by virtue of a takeover or statutory scheme of arrangement. The price per share at which any relevant change of control occurs will be deemed to have been the 90-day average for the purpose of determining vesting against applicable tranche hurdles. Where that price per share is between two hurdles, awards will be treated as vesting at the level of the higher hurdle but with the award size scaled back pro-tanto.

Awards will be settled in shares, which will be newly issued by the Company or transferred out of treasury/the boohoo.com plc Employee Benefit Trust.

Eligible participants in the Growth Plan have cancelled their participation in the 2019 Growth Share Plan and the 2020 Management Incentive Plan. As a result, John Lyttle has disposed of his shareholding of A ordinary shares in boohoo holdings limited ("BHL"), an intermediary holding company of the Group, to the Company for £1 in total and Carol Kane has disposed of her shareholding of B ordinary shares in BHL to the Company for £1 in total.

Mahmud Kamani and Neil Catto have also each disposed of their shareholdings of B ordinary shares in BHL to the Company for £1 in total. Relevant directors' dealing disclosures are contained at the end of this announcement.

The Circular (as defined below) will contain full details of the Growth Plan.

Related Party Transactions

Subject to shareholder approval at the General Meeting, awards under the Growth Plan have been made to the following individuals, each of whom is considered a related party within the meaning of the AIM Rules for Companies. These awards (as detailed below) (the "Related Party Awards") each constitute a related party transaction.

1 Carol Kane will not participate in any award from either tranche 1 or tranche 2

The Independent Directors, being Brian Small, Iain McDonald and Tim Morris (who each also sit on the Remuneration Committee) and Kirsty Britz and Neil Catto, consider, having consulted with the Company's Nominated Adviser, Zeus Capital Limited ("Zeus"), that the terms of the Related Party Awards are fair and reasonable insofar as the Company's shareholders are concerned. In providing advice to the Independent Directors, Zeus has taken into account the following:

·    the maximum dilution of 6.06% under the Growth Plan;

·    the stretching targets ranging up to an implied market capitalisation of over £5.0 billion;

·    that the terms of the Growth Plan have been the subject of a shareholder consultation process;

·   that eligible participants in the Growth Plan have cancelled their participation in the 2019 Growth Share Plan and the 2020 Management Incentive Plan;

·  that the adoption of the Growth Plan and the grant of awards under it are conditional on shareholder approval; and

·   the commercial assessments of the Independent Directors.

General Meeting

There is no legal or regulatory requirement for shareholder approval to be sought in relation to the adoption of the Growth Plan or the grant of awards under it, however, the Company is voluntarily seeking shareholder approval as a matter of good corporate governance.

A Circular and Notice of General Meeting (the "Circular") will be made available to shareholders on the Company's website (www.boohooplc.com) shortly. Shareholders will be sent a notification, either in hard copy or by email, when the Circular is available to view online. Additionally, the Circular will be posted to shareholders who have elected to received printed shareholder communications.

At the General Meeting shareholder approval will be sought for an ordinary resolution to approve the Growth Plan on the terms as set out in the Circular. It is intended that the General Meeting will be held in early March 2023.

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them.