Boohoo’s Irish-born chief on course for €58m payout despite share drop

Offaly man John Lyttle, chief executive of UK-listed online fashion retailer Boohoo, remains on course to pick up the largest corporate bonus ever awarded to an Irish executive, despite a dip in its share price on Wednesday after it warned of a slowdown in revenue growth.

Mr Lyttle is in line to receive shares worth up to £50 million (€57.9 million) in March 2024 if Boohoo hits share-price targets set when he joined from Primark/Penneys just over two years ago.

The market capitalisation when he joined was just over £2 billion. If after five years in charge he has presided over a 180 per cent increase in its value to £5.6 billion, he will receive the full payout.

Despite reporting a pandemic-fuelled 41 per cent increase in sales to £1.75 billion on Wednesday, and a 38 per cent rise in profits, Boohoo’s share price slid by 2 per cent.

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It warned that revenue growth will slow to 25 per cent this year, as its traditional high-street rivals, including Primark, come back on stream as anti-virus restrictions are lifted. Analysts had predicted growth this year would be 29 per cent.

The company was valued at just over £4 billion on Wednesday, despite the share price drop, meaning the share price has doubled in the first two years of Mr Lyttle’s tenure.

Boohoo’s market capitalisation only needs to grow by 40 per cent over the next three years, a far slower rate of growth than Mr Lyttle has already achieved, for him to receive the maximum payout under the incentive scheme.

Boohoo’s performance over the last year was boosted by the pandemic, which shuttered most bricks-and-mortar retailers for long periods, driving customers into Boohoo’s core online domain. It targets young people aged 16 to 30 with fashion brands such as Pretty Little Thing, Boohoo Man and US-focused Nasty Gal.

It has also capitalised on the bloodbath that has engulfed traditional UK retailers in recent years by mopping up the online operations and brands of troubled rivals such as Debenhams and Karen Millen.

Some investors, however, have recently become sceptical about the longevity of the pandemic boosts delivered to other listed companies, such as home-viewing giant Netflix, as major economies reopen and some consumers return to old habits.

Fast fashion

Despite the enormous rises in its sales and profits, the pandemic boost to Boohoo’s value has been offset by huge share price fluctuations over concerns related its so-called ‘fast fashion’ business model and problems in its supply chain regarding worker exploitation.

Mr Lyttle was already halfway to his bonus target within the first nine months of his tenure. However, Boohoo lost £2 billion from its market capitalisation after a Sunday Times investigation last summer found employees of textile subcontractors in its supply chain in Leicester were being paid as little as £3.50 per hour, prompting a huge backlash from UK politicians.

Boohoo has appointed former judge Brian Leveson, who carried out the inquiry into media phone hacking, to oversee the implementation of reforms.

Weeks before the Sunday Times revelations, many Boohoo’s shareholders had already signalled their opposition to its executive pay structure, when 34 per cent voted at its agm to reject the pay report that included the details of Mr Lyttle’s £50 million scheme.