Sports Direct in fresh bid to get bonus plan passed

Sports Direct founder Mike Ashley. Picture: Getty
Sports Direct founder Mike Ashley. Picture: Getty
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Sports Direct is to make a third attempt to pass a bonus scheme for its founder Mike Ashley after shareholders scuppered both previous attempts.

The retailer, with around 670 sports stores in the UK and Europe, has called a shareholder meeting on 2 July to implement the 2015 bonus scheme.

This plan will grant 25 million shares, worth around £200 million, to 3,000 employees including Ashley who also owns Newcastle United FC.

To achieve the payout, the firm’s earnings would have to hit £480m at the end of the 2016 financial year and rise to £750m by 2019. Last year the business posted annual underlying earnings of £287.9m.

If the targets are met, 25 per cent of any award would vest following the announcement of company results in July 2019, and the rest would vest in 2021.

Sports Direct pulled a scheme to award Ashley more than £70m in April after shareholders raised concerns that it was not in line with corporate best practice and did not include other company executives.

That was the third attempt by Sports Direct’s board to reward its founder below, in recent years. One previous proposal was knocked back by shareholders due to concerns over the related performance targets, and another failed to be put to a vote.

Ashley’s allocation under the bonus scheme will be decided later by the firm’s remuneration committee if the meeting passes the plan.

Keith Hellawell, Sports Direct’s chairman, said: “The board and the remuneration committee have responded to the feedback receivedfrom shareholders to develop a long-term share incentive scheme which not only will continue to motivate the company’s employees but which also recognises and rewards the substantial contribution made by Mike Ashley over many years.

“Based on the stretching performance targets established, this scheme has the potential to create a further substantial increase in shareholder value.”

Ashley, who is deputy executive chairman at the retailer, has not received a salary or bonus since the retailer floated in 2007.

However, he netted £929m in the flotation and has also since banked hundreds of millions of pounds by selling further shares in the business. He still owns 58 per cent of the group.

Ashley established Sports Direct after leaving school in 1982 and was the sole owner until the group’s stock market listing seven years ago.

The firm, which has 400 of its stores in the UK, grew rapidly during the economic downturn on demand for its value offers, supported by a mixture of acquisitions, expanding online sales and the demise of its old rival JJB Sports.