Asos Revamps Executive Pay to Drive Growth Amidst Sales Slump
Asos, the online fashion retailer, has announced a major overhaul of its executive pay scheme, replacing its long-term incentive plan with a new Value Creation Plan (VCP). The move, approved by over 90% of shareholders at an extraordinary general meeting, aims to align executive pay with ambitious growth targets.
The VCP will incentivise senior leadership to deliver significant share price growth, with rewards contingent on Asos's share price exceeding £6.70. This threshold, significantly higher than the current share price of 365p, demonstrates the scale of ambition underpinning the new remuneration structure.
Asos highlighted the "substantial growth in the companyâs share price" that the VCP is designed to incentivise. This emphasis on share price appreciation comes amidst a challenging period for the retailer, with sales declining by 18% in the 26 weeks leading up to March 3, 2024. Adjusted group revenue for the period also fell year-on-year from £1.83bn to £1.5bn.
Despite the sales decline, Asos reported a slight improvement in its pre-tax loss, which narrowed to £270m for the half-year period, down from £290m the previous year.
The introduction of the VCP reflects Asos's determination to navigate the current market challenges and drive growth. By linking executive compensation directly to share price performance, the company is seeking to align leadership incentives with shareholder interests and foster a culture of long-term value creation. Whether the VCP can achieve its stated goal of boosting share price and driving growth remains to be seen.
