Sports Direct to outline controversial bonus scheme

Mike Ashley: declined salary. Picture: Getty

SPORTS Direct International is expected to reveal more details of its plans to resurrect a contentious bonus scheme for founder Mike Ashley on Thursday, as 2,000 staff also prepare to land bumper share windfalls.

The company will outline the terms of a new bonus plan for Ashley, the owner of Newcastle United football club, after a previous scheme – which would have delivered a potential £26 million payout – was withdrawn last summer after investors threatened to reject it in a shareholder vote.

Its full-year figures will also be keenly awaited by staff, many of whom are on track to clear another hurdle under their 2011 four-year share incentive bonus scheme.

This comes on top of a lucrative bonus scheme from 2009, which will pay out the second and final tranche of shares to around 2,000 of Sports Direct’s 23,000-strong staff in August.

For an employee earning a salary of £20,000 a year in 2009, next month’s payout will see them pick up 12,000 shares – worth more than £68,000.Sports Direct has surpassed the second year target to achieve £270m in underlying profits for the 2011 scheme.

But it must meet profit targets for the following two years before paying out 2,500 shares in 2015 and 7,500 shares two years later.

Analysts expect Sports Direct to post a 19 per cent leap in underlying profits to £287.3m for the year to 28 April, while they are pencilling in pre-tax profits of £215m.

Sports Direct has enjoyed a solid year, with sales soaring in the wake of rival JJB’s collapse. Total sales for the nine weeks to 31 March rose 14.3 per cent and gross profit lifted 22.7 per cent to £128.6m.

But despite the stellar performance, Ashley’s bonus scheme is likely to prove a controversial issue when investors get the chance to vote on it at the annual general meeting coming up in September.

He has not taken a salary since the company’s 2007 stock market debut, but recently he raised £100m after selling a four per cent stake in his company.