THE row between Mike Ashley’s Sports Direct and the City about the latter’s failure to back a £70 million payout for the billionaire company founder rumbled on today, overshadowing a positive trading update.
Group chief executive Dave Forsey said in the statement that the board, which includes Ashley, was “extremely disappointed to withdraw the [AGM] resolution regarding a proposed share scheme award to Mike Ashley” and warned it could generate uncertainty.
And, in a further sideswipe at institutional investors, Forsey said: “The most disappointing aspect was where large shareholders gave their support only to then vote differently. This outcome is likely to lead to further uncertainty in the future.”
City analysts said they believed Forsey may have been referring to the failure of shareholders to back the windfall resolution for Ashley, possibly putting in doubt an extension of the wider lucrative employee bonus scheme at Sports Direct.
The latter has seen the top 10 per cent of employees given bonuses worth three times their salary. The company had hoped shareholders would approve an award of eight million shares to Ashley if certain targets were hit between now and July 2018.
But the investors did not think the targets were challenging enough. Ashley hit back by dumping £200m of shares in the company and taking an 11 per cent stake in House of Fraser.
Sports Direct said it was on track to meet its full-year underlying profit goal of at least £310m as it revealed that sales for the nine weeks to 30 March rose 10.3 per cent to £360m.
Sales from its core sports shops were up 11 per cent at £293.3m, while profits for the division were up just under 15 per cent at £120.4m. The shares closed down 4 per cent at 797p.