Investor Presentaiton

BOOHOO GROUP PLC DIRECTORS' REMUNERATION REPORT CONTINUED UK CORPORATE GOVERNANCE CODE As indicated in the Remuneration Committee Chairman's Annual Statement, the remuneration policy takes into account the provisions of the UK Corporate Governance Code, despite boohoo not being formally required to report the extent of its compliance against the Code. The Remuneration Committee believes that in the vast majority of areas the remuneration policy complies with the principles and provisions of the Code. This has been enhanced through proposed changes to the policy such as the alignment of directors' pension provision with the wider workforce with effect from January 2023 and the introduction of post- employment shareholding requirements. The main point where the policy is not currently fully compliant with the Code is that certain share awards do not have a total vesting and holding period of five years or more. This applies to standard awards made to the CFO and other senior executives under the LTIP, and to the Management Incentive Plan (MIP) structure introduced for certain executive directors during 2020. In both cases, awards vest subject to extremely challenging performance conditions to be met over a three-year period. Although there are no formal post-vesting holding periods in place for these awards, the executive directors are obliged to comply with shareholding requirements which have recently been strengthened and which, as noted above, will now apply for a period of time following cessation of employment. As such, the Committee believes that the current structures are sufficiently long-term in nature. It should also be noted that the Growth Share Plan, introduced for the CEO in 2019, has a five-year performance period and is thus compliant with the Code. The Committee has considered the principles set out in Provision 40 of the Code and believes that the policy sufficiently addresses these principles, as set out below: ANNUAL REPORT AND ACCOUNTS 2021 // GOVERNANCE Principle Clarity Simplicity Risk Predictability Proportionality Alignment to culture How it is addressed The remuneration policy and its application are set out in detail in this Directors' Remuneration Report, providing shareholders with full information on all elements of directors' pay and how the policy is set. The level of detail provided has been extended this year to reflect the Committee's desire to report in line with best practice, and the vast majority of the reporting requirements for Premium Listed companies have been adopted. The Committee believes strongly that simple remuneration structures based around easily-understood performance measures are likely to be the most effective in terms of incentivising outperformance. For example, the annual bonus scheme rewards performance against a relatively small number of financial and (with effect from FY2022) non- financial metrics. The Growth Share Plan (for the CEO) and the MIP (for the other executive directors) pay out primarily due to the growth in the market capitalisation of boohoo and are not complicated through the use of metrics such as relative Total Shareholder Return. The remuneration policy is designed to be compatible with the group's risk policies and systems. The policy rewards strong levels of growth in the business and has been instrumental in the group's success since admission. The Committee has considered very carefully the current incentive structures in light of the issues raised during the course of the financial year and has recognised the merits of making some enhancements. For example, participants in the Growth Share Plan and the MIP have agreed that no awards will vest unless the Committee is satisfied that the Agenda for Change programme has been successfully implemented over the performance period. This is intended to provide additional reassurance that executives are directly focused on resolving the supply chain issues which have emerged and not focused solely on growth without due recognition of wider stakeholder interests. The extent of potential remuneration outcomes for directors is clear from the policy and implementation disclosures in this report. There is a limit on the size of annual bonus payments and awards under the standard LTIP. Although there is a wide range of potential outcomes under the Growth Share Plan and MIP, both plans are capped in the sense that individual participants cannot earn more than specified amounts. The incentive schemes are designed to support our strategic growth programme as we strive to lead the fashion e-commerce market globally. The schemes operate with ambitious targets which are closely aligned to the growth aspirations of the business. There is no potential for rewards for failure or poor performance. boohoo's fast-moving and performance-driven culture has been integral to its success and the incentive schemes have been designed to reflect this approach. The changes to the remuneration policy as discussed in this report will also help ensure that incentives take due account of the need for growth to be matched with a focus on the management of stakeholder relationships which are critical to the long-term value of the brand. POLICY REPORT PAY PHILOSOPHY The Remuneration Committee ('Committee') is responsible for determining, on behalf of the board, the group's pay philosophy and the policy on the remuneration of the executive directors, the Chairman and other senior executives of the group. The aim of the remuneration policy is to ensure that high calibre senior executives are provided with remuneration, which is designed to promote the long-term success of the group. The policy includes performance- related elements, which are transparent, stretching and rigorously applied so as to enhanced performance and to reward, in a fair and responsible manner, individual contributions to the success of the group. encourage The remuneration policy is designed to be compatible with risk policies and systems and to be aligned with the group's long-term strategic goals. The policy framework is structured so as to adhere to the principles of good corporate governance and has been developed taking into account the principles of the UK Corporate Governance Code and the QCA Corporate Governance Code. The performance-related variable pay component makes up a significant proportion of the overall package for senior executives and is designed to incentivise the delivery of the group's growth strategy and other strategic and business objectives. The interests of the executives are designed to align with the interests of shareholders through encouraging equity ownership and, in support of this, awards under the group's equity incentive plans are made where appropriate. CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE GROUP When setting the remuneration policy for executive directors, the Committee takes into account the overall approach to reward for, and the and employment conditions pay of, other employees in the group, especially when determining annual salary increases. This process ensures that increase to any the of executive directors is set in an pay appropriate context, especially relative to increases proposed for other employees. The Committee is also provided with periodic updates on employee remuneration practices and trends across the group. The principle of encouraging our senior executives to be shareholders in the business is reflected across the group as a whole and a key aim of the remuneration policy is to encourage widespread equity ownership across the whole employee base. In support of this objective, we operate an HMRC- approved Share Incentive Plan and an approved SAYE option plan. The Committee has not consulted directly with employees in designing the remuneration policy for the directors. However, in line with the recommendation of the UK Corporate Governance Code, the Committee intends to engage with employees to explain how executive remuneration aligns with wider company pay policy. CONSIDERATION OF SHAREHOLDER VIEWS The Committee pays close attention to the views of shareholders when setting the remuneration policy for executive directors. This includes consideration of shareholder voting on the Directors' Remuneration Report resolution at each AGM, the published guidelines of investors and their representative bodies and individual feedback received by the Committee. In recent months, the Committee has also consulted with major shareholders on the proposed changes to the policy. 68 69