Boohoo raises concerns over Revolution Beauty's unapproved £2 million share awards

Boohoo, a major shareholder in Revolution Beauty, has raised concerns over the beauty brand’s decision to grant more than £2 million in share awards to its management team without seeking investor approval. The dispute between the two retailers has escalated after Revolution Beauty reinstated its leadership team despite a shareholder vote against it. The company’s shares resumed trading on AIM after a suspension that had been in place since September.

According to Revolution Beauty, the senior management team received free share options as a reward for their hard work and for boosting the group’s sales. However, boohoo highlighted that shareholders were not consulted on these share awards, which are expected to dilute existing shareholders by 3.4%. The online fashion retailer has demanded full transparency and the publication of detailed information regarding the share options.

In response, boohoo expressed its concerns about the lack of transparency and perceived self-serving actions that do not align with the best interests of shareholders. The ongoing dispute has shed light on the comparatively relaxed governance standards within the AIM market, in contrast to the London Main Market.

Lindsey Stewart, director of investment stewardship research for Morningstar, noted that this conflict raises questions about governance standards among AIM-listed companies, which have historically fallen short compared to those on the Main Market. She drew parallels to the past failure of Patisserie Valerie and highlighted Boohoo’s own controversies regarding governance arrangements and supply chain oversight.

The timing of this clash is noteworthy as the financial watchdog is considering changes to the London market’s listing rules that could potentially strengthen founders’ and directors’ influence at the expense of shareholder rights.

While Revolution Beauty has not immediately responded to Boohoo’s concerns, CEO Bob Holt purchased 1.0 million shares at 26 pence each, amounting to £260,000. The shares comprise his sole holding. Non-Executive Chair Derek Zissman also acquired 100,000 shares and now holds 130,000 shares.

Following the resumption of trading, Revolution Beauty’s shares experienced a 12% increase to 27.50p on Thursday at midday. Conversely, boohoo’s shares declined by 1.6% to 33.90p.