Asos proposes a new bonus plan aimed at substantial shareholder value.
- The proposed “Value Creation Plan” could replace the existing incentive scheme.
- Executive bonuses are linked to significant share price targets.
- The plan is set against a backdrop of recent sales challenges.
- Shareholder deliberation on the proposal is scheduled for 20 August.
Asos has put forward a Value Creation Plan intended to deliver ‘exceptional value for shareholders through substantial growth’ by reshaping how executive bonuses are awarded. This proposal marks a significant shift in remuneration strategy, ensuring senior leaders’ rewards are closely aligned with the company’s ambitions to enhance shareholder return by boosting the company’s share price significantly.
This novel incentive framework, detailed on 2 August, will supplant the current ‘Long Term Incentive Scheme’ with a more competitive and growth-focused approach. Bonuses under this scheme could reach 150% of base salary, contingent on the company achieving a share price that exceeds £6.70, approximately double from when the scheme’s framework began.
The proposal emerges amid reports of an 18% sales decline over a six-month period ending 3 March, despite a marked improvement in cash flow by £240 million year-on-year. Asos’s financial narrative underpins the potential effectiveness of the proposed scheme, shifting emphasis to profitability amid challenging market conditions.
In light of the announcement, Asos’s share price experienced a slight decline, dropping from £3.61 on the day of the announcement to £3.40 shortly after. Asos acknowledged discrepancies in management remuneration, stating: ‘Inevitably, there are some differences between our management and the rest of the business,’ reflective of the distinct talent markets it operates within.
Asos also announced the removal of bonus incentives for diversity, equity, and inclusion, choosing to focus on profitability in line with its strategic directives. The discourse on these changes will culminate at a shareholder meeting on 20 August in London, where stakeholders will assess the feasibility and potential impact of the proposed remuneration adjustments.
The proposed incentive plan signifies Asos’s strategic shift towards enhancing shareholder value through aggressive growth targets.
