Asos is set to overhaul its executive remuneration scheme to drive shareholder value.
- The new Value Creation Plan (VCP) is designed to replace the existing Long Term Incentive Scheme.
- Under the proposed VCP, senior leaders would be rewarded if the share price exceeds £6.70.
- The maximum annual executive bonus under the VCP could reach up to 150% of the base salary.
- Shareholders will discuss the new pay proposals at a general meeting on 20 August.
Asos has unveiled a proposed overhaul of its executive remuneration structure, announcing the new ‘Value Creation Plan’ (VCP). This plan aims to replace the pre-existing Long Term Incentive Scheme with a more targeted approach, aligning executives with ambitious growth objectives. The intent is to drive significant shareholder value by rewarding senior leaders if the company’s share price exceeds £6.70, which is nearly double its price at the time of the scheme’s design.
The proposed scheme allows for a maximum bonus of 150% of an executive’s base salary, incentivising them to propel the company’s growth. This approach reflects Asos’s commitment to substantial growth and aims to competitively position the company within the diverse talent markets it engages with.
Despite the ambitious nature of the VCP, Asos’s share price experienced a slight downturn following the announcement, falling from £3.61 to £3.40. However, the proposal indicates the company’s resolve to enhance alignment between leadership incentives and shareholder interests.
The introduction of the VCP comes after Asos reported an 18% sales drop for the 26 weeks up to 3 March. Nevertheless, they highlighted an improvement in free cash flow by £240m year on year, underscoring a complex financial landscape.
Asos has communicated to shareholders that the new scheme results from attempting to stay competitive in different talent markets and inspire greater ambition within its leadership team. Additionally, the company has decided to eliminate bonus incentives previously linked to diversity, equity, and inclusion, choosing instead to focus on profitability.
The new remuneration strategy will be a key topic at the Asos shareholders’ meeting scheduled for 20 August in London. This meeting will serve as a platform for further discussions on the plan’s efficacy and the potential impact on the company’s future trajectory.
The proposed Value Creation Plan underscores Asos’s focus on aligning leadership incentives with shareholder value and growth.
