Mike Ashley is shedding no tears for Boohoo

Some shareholders are spoilt for choice. Take the lot at Boohoo. Who do they want calling the shots at the business: Mahmud Kamani, the co-founder whose team has, since June 2020, taken 93 per cent off the value of the company; or the self-styled, fireplace-puking “power drinker” Mike Ashley?
It’s what you call being caught between a frock and hard place. Is voting for neither an option? Sadly not, now that Big Mike, with 28 per cent of Boohoo, is throwing his weight around at the increasingly threadbare fast-fashion retailer. The trackie bottom billionaire, who deserves credit for building the £3.3 billion Frasers group, was already trying to muscle on to the Boohoo board, alongside some mate from Kroll, Mike Lennon. Yet, before we’ve even had that December 20 showdown, he’s now requisitioning another shareholder meeting.
The point of this one? To vote on booting Kamani off the board: an endeavour curiously timed as it coincided with Boohoo finally agreeing that its executive chairman could no longer continue in the role. Kamani, who owns 12 per cent of the shares, with his family taking the total to 23 per cent, will at last be answerable to an independent chairman: the existing non-exec Tim Morris. Or at least, ostensibly.
Still, none of that stopped Ashley beating the “Kamani must go” drum or publishing a legal opinion, claiming that despite him owning 73 per cent of Frasers and 24 per cent of Boohoo’s rival Asos, there would be no conflicts of interest and “no competition law issue, not even a realistically arguable one”.
Really? It was the work of Robert O’Donoghue KC, who said that, should Ashley join Boohoo’s board, he’d comply with all his “fiduciary duties” and not share “confidential” info with Frasers. Even so, since when has Ashley been such a stickler for corporate governance niceties? He made his own son-in-law, Michael Murray, the Frasers chief executive, even if that decision worked out. And, over the years, the fellow once filmed dancing topless in a curry house, has served up all sorts of governance delights.
Who can forget the PC Plod affair, when independent shareholders voted Sports Direct’s ex-copper chairman, Keith Hellawell, off the board only for Ashley to reinstate him? Or him being hauled before MPs after failing to pay workers the minimum wage at its Shirebrook warehouse? Then, he told them he was beyond the help of the PR industry: “I won’t listen to them because I can’t be house-trained.”
Quite. He’s proved it, too, with his scattergun stake-building in other companies, some of which like Debenhams and Goals Soccer Centres went bust. In the case of Studio Retail Group, as Boohoo has noted, after taking a 30 per cent stake and agitating for a seat on the board, Frasers ended up buying the company out of administration.
No surprise, then, that Boohoo may wonder if Ashley has a similar aim: destabilise the group, force a break-up and buy any of its assets he wants — Debenhams and Karen Millen, say — on the cheap. True, fresh from a pricey £222 million debt refinancing, half-year losses of £147 million and a £39.3 million cash-call at 31p, Boohoo is in a right mess. And who knows if its rookie new chief Dan Finley can fix it.
Yet, if Ashley wants more influence, there’s a conventional route: just bid for Boohoo, an outfit presently valued at a bombed-out £390 million. It’d be far more honest than all this frocking about.
In terms of the money involved, it really is a drop in the ocean. Ofwat has proposed allowing the water companies to spend £88 billion over the next five years fixing the network. So, getting all uppity over £6.8 million of director bonuses could look absurdly irrelevant.
Yet, there’s a principle at stake. Customer bills should not be spent keeping bosses in bonuses, when they’re dumping sewage into our rivers and seas. So, the regulator is right to exercise new powers to stop nine companies using “customer money to fund bonuses”, insisting investors pick up the tab instead.
Six companies agreed to play ball. But in three cases — Thames Water, Yorkshire Water and Dwr Cymru — Ofwat said it would block the payment of £1.5 million of bonuses out of customer bills. In practice, Ofwat will just dock the money off future regulatory settlements. And the executives are still likely to get the money. At Thames, whose shareholders have thrown in the towel, its boss Chris Weston and finance chief Alastair Cochran have already been paid a total £770,000. Creditors will probably cough up.
The bigger question is what happens next. The government’s Water (Special Measures) Bill is seeking to give Ofwat extra powers to block bonuses, such as when a company has been convicted over a sewage spill. It seems fair enough, too. Yet, this time, it would have caught the likes of Severn Trent, United Utilities and Pennon.
Isn’t there a risk companies jack up basic pay to compensate, as the banking industry did over the bonus cap? Or that talented executives steer clear of the water industry? As helpful regulatory measures go, it may not be quite such a slam dunk.
One speech from the PM and look at this: from now on the Competition and Markets Authority will only block “a truly problematic merger”. Or so says its boss Sarah Cardell. So what will it do all day, then? In the 12 months to March 2024, it only blocked one deal anyway, Microsoft-Activision — rightly too, despite the furore — waving it through after concessions.
If hardly any are “problematic”, the rest can be fixed by behavioural remedies. So, what excuse for long merger inquiries? The CMA could deal with most in just a few months.