Mike Ashley, the founder of sportswear chain Sports Direct, could be in line for a share bonus worth more than £65 million if shareholders approve the plans next month.
The firm said the Newcastle United owner receives no salary for his role as executive deputy chairman, despite his “substantial contribution” to the success of Britain’s biggest sporting goods retailer.
Shareholders will be asked to vote on 4 April on proposals to award Ashley – who owns 62 per cent of Sports Direct – options over eight million shares, worth more than £65m based on yesterday’s closing price of 838p. The shares would vest in July 2018 if performance targets are met – as majority owner, Ashley will not vote on the proposal.
Chairman Keith Hellawell said: “The company has already received support from its largest institutional shareholder, Odey Asset Management, who has confirmed that it intends to vote in favour of the resolution.
“The board believes that Mike is one of the outstanding retailers of his generation and that all shareholders benefit from his ongoing commitment to Sports Direct.”
The share award would depend on Sports Direct delivering underlying pre-tax profits of £330m this year, and £410m in 2015, as well as achieving a net debt to underlying earnings ratio of 1.5 times or less at the end of its 2015 financial year.
Analysts at Espirito Santo noted that the net debt target meant Sports Direct would not be able to buy department store chain Debenhams for cash and remain below that borrowing threshold.
Sports Direct has not said it plans to buy Debenhams, but is in talks to strike a partnership with the retailer.
Under a complex deal in January, Sports Direct sold a 4.6 per cent stake in Debenhams, making a profit of more than £4m, and then revealed it had taken a “put option” that could see it emerge with a 6.6 per cent stake.
Ashley set up the business on leaving school in 1982 and was the sole owner until its stock market listing in March 2007.
A previous scheme that would have delivered him a £26m windfall was rejected in a shareholder vote in the summer of 2012.
As well as benefiting from the demise of rival JJB Sports, part of Sports Direct’s recent success has been put down to its employee bonus scheme, which last summer rewarded 2,000 staff with shares worth around £68,000. The 2011 staff scheme is also on track to reward more than 3,000 staff having already surpassed two of the four earnings targets.
Sports Direct has about 400 UK stores and operations in 19 countries in Europe. It also owns brands including Dunlop, Karrimor and Slazenger. The firm’s shares entered the blue-chip FTSE 100 index in September.