Asos founder Nick Robertson is receiving almost 1.5m shares worth nearly £25m
Seven top managers of online fashion retailer Asos are being handed £66m in shares after hitting all the targets in a three-year incentive plan.
Chief executive and founder Nick Robertson is receiving almost 1.5m shares worth nearly £25m while his three fellow directors are sharing more than £35m, and a further £6m is being handed to three senior colleagues. The board is now considering introducing whether to introduce a replacement incentive scheme.
The Aim-listed company, which on Thursday reported a near-doubling of pre-tax profits to over £30m, is also beginning the search for a new chairman to replace Lord (Waheed) Alli, who is leaving after 12 years. Media entrepreneur Alli will remain until a successor is found.
The valuation of the share awards is based on a price of £16.55, after the stock jumped 8% following the release of the full-year profit figures.
Robertson – whose 10% stake in the business is worth £140m – painted an upbeat picture for the future. “We remain positive in our outlook for 2012-13 as we continue our journey to becoming the world’s number one online fashion destination,” said Robertson, who started the website in 2000.
At the time the business was called As Seen On Screen, based on Robertson’s idea to allow twentysomethings to copy the styles of their favourite celebrities. The company was listed in 2001 and has since evolved to offer a much wider range.
Robertson said he remained motivated and the award of shares “was not an issue” as he could sell down his existing stake at any time. He is receiving the 1.5m shares after a “management incentive plan” put in place in April 2009 reached two targets based on rewards for shareholders: earnings per share, which grew by a compound annual rate of 42%, and total shareholder return. This target was based on a notional investment in all the companies in the FTSE All Share retailers’ index and required Asos to be in the top decile relative to the index – which it was, with a return of 472%. During the same three-year period, its stock value has risen from £220m to £1.4bn.
Nick Beighton, the finance director, is receiving 730,000 shares worth approximately £12m; Jon Kamaluddin, international director, will get about 610,000 shares worth about £10m; and product director Robert Bready is receiving 788,000 shares worth around £13m. The shares are being handed out in two tranches – the first on 30 September 2012 and the second on 30 September 2013 – and the company is applying to Aim to list the 4m shares required to meet the terms of the incentive plan.
The company, which now has websites targeting seven countries including Britain, the US and Australia, has 8 million registered users and 4.4 million “active” customers in 160 countries to which it has shipped clothing and accessories in the last 12 months. Almost 70% of its web traffic – largely from 15-to-34-year-olds – is from outside Britain.
Pre-tax profits rose 93% to £30.3m; excluding exceptional items, they rose 43% to £40m after a 49% rise in sales to £481m. Revenue was up 46% to £495m, and the goal is to achieve £1bn in sales from five major markets by 2015. Robertson said he was confident of achieving this target. “The fact is it requires 27% compound growth over the next three years, which is a rate below what we’ve been achieving over the last 10 years,” he said.
The international business, which accounted for 59% of total sales compared with 43% a year ago, is now the fastest growing arm of the company with sales rising 103%, compared with 7% in the UK, where growth is expected to be flat in the coming year. The company is targeting countries such as Russia and China for growth in the coming months.
Freddie George, retail analyst at Seymour Pierce, said: “Over time, we believe the long term value of the company will increasingly be in the brand, as competition and the likely departure of third party labels erodes the value of the website.
“We remain concerned that the Asos brand does not have a strong identity outside the UK and the cost of developing it overseas will be significant. Management rightly, as evidenced by comments at a recent fashion show, is focused on improving the quality of the assortment – improving fashionability rather than increasing the number of lines.”