Boohoo has complied with pressure from shareholders and MPs to link its bonus scheme to improvements in its supply chain.

The move comes as part of the Manchester-based retailer’s “Agenda For Change” programme, implemented after criticism from the House of Commons' Environmental Audit Committee.

The scheme would see £150 million awarded to Boohoo’s founders and executives if its stock price rises 66 per cent over a three-year period – starting from June 2020.

Co-founders Mahmud Kamani and Carol Kane could receive £50 million each under the scheme.

Boohoo came under fire in July 2020 for alleged poor working conditions and low pay in its Leicester factories.

The commitment will be overseen by the company’s non-executive directors, who have the authority to cut bonuses.

The allegations involved workers being paid as little as £3.50 an hour across 18 factories in the city.

Boohoo has been one of retail’s pandemic success stories and announced a pre-tax profit increase of 35 per cent to £1.2 billion earlier this month.

However, it could potentially face a US import ban over allegations that the company has unfair labour practices in its supply chain.

In March, it was also revealed that the online retailer had streamlined its supplier network by over 400 firms as part of measures to remove supply chain abuses.

The group's recent annual report showed that total executive pay at the company has fallen, despite the strong financial results for the year.
Renumeration for executive directors fell by 17.6 per cent to £5.41 million for the 2020 financial year.

“We have redesigned the executive directors’ remuneration policy to align the interests of the executives with stakeholders, including the introduction of performance conditions linked to ESG criteria,” said the report. “This is an important part of the board’s response to the findings of the independent review and the successful implementation of the corporate governance aspects of our Agenda for Change programme.”

Environmental audit committee member Philip Dunne MP said: "It is incredibly welcome news that senior Boohoo executives have accepted our committee's recommendation to link bonuses with improvements to their supply chain."

"While it appears that only 15 per cent of the bonus will be tied to ESG (environmental, social and governance) improvements, it is encouraging that Boohoo's remuneration committee will have the discretion to scrap the entire bonus if these much-needed changes are not implemented."

"Bonuses shouldn't just be linked to breakneck growth. Today's action, alongside a commitment to join the Textiles 2030 climate targets, demonstrates Boohoo's commitment to becoming a responsible corporate citizen.

He added: "I hope we are reaching a turning point in fast fashion's awareness of its environmental and social responsibilities and would encourage other firms to follow suit."

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