Asos has changed its criteria for directors to achieve their bonuses, scrapping diversity targets.
The online fashion giant’s annual executive bonus will now mainly be based on hitting profit targets, along with improving its share prices and profit margins.
It comes as other big companies have faced investor pressure to deprioritise ESG targets and refocus on profits. Unilever’s new CEO Hein Schumacher has said it will no longer “force-fit” all of its brands with a social purpose.
In its last financial year, Asos’ annual bonus was based 15% on revenue, 25% on adjusted pre-tax profit, 35% on adjusted free cash flow ,and 25% on strategic and ESG measures.
The strategic and ESG element was measured on diversity, equity, and inclusion and had female and ethnic minority leadership targets.
For its current financial year, 75% of the bonus is based on adjusted EBITDA with the remaining 25% measured against targets for closing stock, adjusted gross margin and cost to serve.
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Asos has made the decision is growing profits is “what management will be focused on delivering for the year ahead”. It said the move was in order so as not to “detract from our emphasis on profitability”.
The online retailer, which plunged to a near-£300m full-year loss in its last financial year, is eyeing a return to growth in 2025.
It will instead include a diversity measure in its longer-term incentive scheme.
Asos has a target to hit 50% female and 15% ethnic minority representation at every leadership level by 2030.
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