Fashion retailer Boohoo has linked its executive bonus schemes to hitting environmental, social and governance (ESG) targets, following pressure from shareholders.
Executive pay and bonuses
Boohoo may link bosses’ bonuses to ESG improvements
Foxtons investors rally against chief executive bonus
Large firms face increasing pressure to tackle executive pay and diversity
The company, which was heavily criticised by MPs last year following reports of poor working conditions at its factories, last month told the government’s environmental audit committee that it was considering aligning bosses’ remuneration to improvements in its supply chain.
It confirmed this commitment in its annual report yesterday, and said it would “supplement the current financial performance conditions for the annual bonus with a mix of ESG and strategic non-financial targets”.
Roughly 15% of the 2022 bonus would be based on the company hitting the targets under its “Agenda for Change” programme, which involves improving standards and conditions for workers in its supply chain.
Boohoo’s remuneration committee will also be able to scale back executives’ entire bonus if it believes the Agenda for Change programme has not been implemented successfully.
“These changes are designed to ensure that the management team remains focused both on growing the business and continuing to make progress on addressing the supply chain issues,” it said.
The remuneration committee said the comments it received from shareholders had been “instrumental in informing the changes that we have made”.
In September 2020, a report compiled by Alison Levitt QC, who had been commissioned by Boohoo to review working practices in its supply chain, found that staff in garment factories were paid below the minimum wage and faced pandemic-related health risks at work.
The overhaul of Boohoo’s supply chain is being monitored by KPMG and the retired judge Sir Brian Leveson.
