Boohoo co-founder Carol Kane faces shareholder revolt

Boohoo co-founder Carol Kane faces shareholder revolt over reappointment
// Advisory group says a Boohoo board incentive scheme could lead to “excessive payouts”
// Glass Lewis is advising shareholders to block the re-appointment of co-founder Carol Kane
// It cited her “direct role” in the inadequate governance practices” regarding the Leicester factory scandal last year

Boohoo co-founder Carol Kane is facing a shareholder revolt regarding her reappointment to the board in the wake of her role in last year’s Leicester factory scandal.

Influential shareholder advisory group Glass Lewis urged City investors to block the reappointment of Kane to Boohoo’s board, citing concerns about high pay and her “direct role” in the “inadequate governance practices” regarding the Leicester factories that make the online retailer’s clothes.

Last year Boohoo was embroiled in modern slavery allegations after an investigation found workers at one of its Leicester suppliers reportedly undertaking excessive hours in high-risk conditions amid the Covid-19 pandemic, and often on illegal low pay.


No senior Boohoo director has lost their job over the scandal, although the online retail giant has since launched an investigation, led by Alison Levitt QC, into its supply chain and pledged to address issues around sustainability and working conditions.

Earlier this month, Boohoo increased the base salary of Kane and her co-founder – and current chairman – Mahmud Kamani by 3.5 per cent to £450,000 in the financial year to February 28.

Both are also each eligible for a £50 million bonus if Boohoo’s market capitalisation hits £7.5 billion by June 2023. It is currently at £4 billion.

An additional £50 million worth of bonuses would be paid out between 15 key directors if Boohoo’s market valuation hits its target.

However, Glass Lewis advised shareholders to vote against Boohoo’s remuneration report.

It said the new management incentive scheme could lead to “excessive payouts” based predominantly on the performance of Boohoo’s shares.

Boohoo said this month that the board would have the power to reduce the payout if the group’s Agenda for Change programme was not fully implemented.

The programme includes establishing a whistleblowing system, responsible sourcing plan, and publishing the names of all factories used by Boohoo worldwide.

Boohoo had also confirmed earlier this month that it would link senior executive director bonuses to its environmental, social and governance (ESG) improvements.

The Environmental Audit Committee (EAC) had made the recommendation to link those bonuses to its ESG improvements in a letter to Boohoo following an evidence session – which was prompted shortly after the supply chain scandal – in December.

In its report last week, Glass Lewis said: “We have reservations regarding these plans, whereby the executives may be eligible for extremely large payouts based predominantly on share price performance, which may primarily reflect market forces rather than company or management performance.

“We acknowledge that the company has introduced an underpin to the awards under these schemes, whereby vesting is subject to the committee being satisfied that the Agenda for Change programme has been successfully implemented over the performance period.

“We believe this is a positive direction of travel in terms of aligning the awards with shareholders’ interests; however, remain concerned with the underlying nature of the plan.”

Another influential shareholder, Pirc, remained sceptical about Boohoo’s board reining in pay.

It cited the full annual bonuses paid this year to top directors despite Levitt’s report finding they were aware of “very serious issues” about the treatment of Leicester factory workers which they “did not move quickly enough” to address.

Pirc head of stewardship Tom Powdrill added that the approval of the full bonus did “not give us confidence on how they would implement [the limits on future bonuses] in practice”.

A Boohoo spokesperson said: “During recent months the remuneration committee engaged extensively with institutional shareholders in drawing up the overall remuneration policy which includes [environmental and social] metrics as part of the annual remuneration for directors.

“The interaction was very constructive and has resulted in the company’s Agenda for Change being a key factor in determining senior executive remuneration.”

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