Yet that’s not stopped it from rewarding its top team with a £1 million ($1.28 million) bonus each. The move has angered the Manchester-based retailer’s shareholders, the Times reported, and it’s also raised questions about why Boohoo is awarding generous bonuses amid pretax losses worth £160 million ($204.8 million) in the year ending February 2024.

Why is Boohoo’s exec team getting big payouts?

Boohoo acknowledged in its annual report published earlier this month that CEO John Lyttle, along with cofounders Mahmud Kamani and Carol Kane, didn’t qualify for a bonus as the company fell short of its financial goals for the year. 

However, its remuneration committee felt that not rewarding the top team financially would hurt their motivation and retention prospects for the next financial year. 

“The formulaic outcome is not an accurate reflection of the excellent work carried out,” the annual report said—a recognition that a leader’s performance is always to an extent relative to the hand they were dealt.  

As a result, the committee opted to pay £1m ($1.28 million) each, equivalent to 49.1% of Kamani and Kane’s maximum annual bonus, and 67.1% of Lyttle’s. Of the total bonus, 30% will be paid in cash while the rest will be paid in stocks, the company said. 

Boohoo didn’t immediately return Fortune’s request for comment. 

The investor reaction

Given Boohoo’s lackluster earnings and swelling debt pile, shareholders are reportedly angry that the company’s leadership is being so amply rewarded, with some planning to vote against the compensation at the annual shareholder meeting next month. 

Boohoo’s remuneration committee chair, Iain McDonald, said the company was trying to streamline its existing annual bonus and performance share plan, which will also be discussed at the June meeting. 

The British fashion company has been working to reform its incentive pay for top management, making it easier to reward them financially. One such measure would have resulted in a bonus of as much as £50 million ($64 million) for CEO Lyttle if Boohoo’s market capitalization hit £5.6 billion ($7.2 billion) by 2024. Needless to say, this did not happen.

“The market is unimpressed with paying executives £1 million packages when the performance of the company has been woeful,” Kathleen Brooks at investing platform XTB told Fortune. 

“The decline in the share price so far this year makes that incentive plan seem ambitious…hence why the company is trying to push through big pay packages once again.” 

The wider context

CEO pay has always been contentious, but it has been especially prominent in recent years when the cost-of-living crisis has pressured workers’ real average wages.

Against this backdrop, concerns about overpaying CEOs have hit companies around the world—for instance, carmaker Tesla’s shareholders are under pressure to reject the $56 billion pay figure for CEO Elon Musk, the world’s second-richest man. 

In Boohoo’s case, a shareholder revolt surrounding bonus payouts would come just as it tries to push past its slew of financial and reputational problems. 

The company was all the rage during the COVID-19 pandemic as shoppers confined to their homes turned to retail therapy, later gaining fame thanks to celebrity ambassadors like Manchester City footballer Jack Grealish and reality star Kourtney Kardashian Barker. 

However, like many other businesses that benefited from the pandemic e-commerce boom, Boohoo has since struggled, with its shares falling 84.5% over five years, and has resorted to  cutting costs in an attempt to turn its fortunes around. It was also caught in high-profile scandals involving labor abuse, mislabeling products, and greenwashing.  

Boohoo already faced a revolt last June, with a third of shareholders voting against the proposed annual remuneration. What happens this time will show the limits of its investors’ patience.