Boohoo faces showdown at shareholder meeting

Boohoo is facing a showdown at its shareholder meeting this week, after two influential advisory groups urged investors to vote against its executive pay proposal.

The online fashion group risks a shareholder backlash at its meeting on Thursday, after the company, which has sought to rebrand as Debenhams, was accused of “a lack of clarity” around pay packages for bosses.

Institutional Shareholder Services (ISS), the world’s largest adviser on annual meeting voting, and its biggest rival, Glass Lewis, both recommended investors vote against the executive pay report later this week.

ISS said Boohoo had failed to confirm whether a bonus worth more than £2m in cash and shares for Dan Finley, its chief executive, was given on a like-for-like basis for forfeited awards in his previous role.

Mr Finley took over as the boss of Boohoo last November, having previously been chief executive of its department store chain Debenhams.

Boohoo has since put Debenhams at the centre of a turnaround push, shifting focus away from its younger fashion brands such as PrettyLittleThing. It decided to rename the company Debenhams, although its corporate entity is still listed as Boohoo.

ISS said it was also concerned over other bonuses for executive directors, which did not contain performance hurdles.

Glass Lewis warned over the use of discretionary bonuses by Boohoo, saying it “indicated a lack of resolve on the part of the board to put incentive awards truly at risk”.

The advisory group said: “Glass Lewis is generally sceptical of any type of extra bonus that rewards individuals for actions that we view as intrinsic to an executive’s duties, such as negotiating sales and acquisitions.”

The risk of a rebuke at the shareholder meeting comes as Boohoo grapples with growing anger from its largest investor.

Mike Ashley’s Frasers Group recently mounted a bid to oust its chairman, warning Tim Morris to “expect a shareholder meeting for a vote on your personal position”.

It followed concerns around a recent £175m loan deal, with Frasers accusing the chairman of ignoring the best interests of investors by going for a more expensive financing option.

It marked the latest twist in an ongoing row between Frasers and Boohoo over the direction of the business.

Last year, Mr Ashley sought to install himself as chief executive of the group, arguing he could revive the struggling online retailer, which has seen its shares drop almost 90pc over the last five years.

However, last December, a proposal over him joining the board was voted down by Boohoo’s investors.

Mr Morris at the time described the outcome as a “solid and resounding victory”, while Mr Finley said there was “huge amounts of value in the Boohoo group, and my job is to demonstrate that and generate and maximise value for the benefit of all of our shareholders”.

Last month, the company revealed it suffered record losses, plunging £348m into the red last year. Bosses said there had been a “long period of sustained and unacceptable underperformance”.

A spokesman for the company said: “The Renumeration Committee sets our remuneration policy, aligning it with the need to attract and retain our leadership team, and deliver against the group’s multi-year turnaround strategy. We are pleased that both ISS and Glass Lewis supported all binding resolutions.

“We thank them for their comments on the advisory remuneration resolution, and we will continue to consider their recommendations as we determine our go forward policy.”

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