Sports Direct staff score with bonus

ABOUT 2,000 staff at retailer Sports Direct are on track to enjoy big bonus windfalls for a second consecutive year despite tougher performance targets introduced by boss Mike Ashley.

Sports Direct, known best for its replica football shirts and trainers, will confirm at its interim results on Thursday that last summer's World Cup has driven a barn-storming performance, which places staff in pole position to receive the payouts again.

Ashley, who is also owner of Newcastle United Football Club, and his management team introduced the bonus scheme for permanent non-boardroom staff in the company's 2009/10 financial year.

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Employees received payouts last summer valued at up to 25 per cent of their base salaries after the group made underlying earnings of 170 million. The windfall was distributed in the form of new shares, priced at 1 a share, which can be cashed in from 2012, netting staff a potentially bigger sum depending on the firm's share price at the time. Sports Direct stock closed at 146p on Friday.

The earnings figure last summer beat the firm's target of 165m, which included the 10m cost of the scheme.

This year's scheme will pay out deferred share bonuses worth a greater 75 per cent of employees' basic salaries, at 1.25p a share, if Sports Direct makes underlying earnings of 205m before the cost of the scheme.

Dave Forsey, chief executive of Sports Direct, said at a trading update in October that he was comfortable with the current targets. "The board believes that the bonus share scheme has played an important role in delivering this strong performance," he said.

The group has suggested a trading boost from the World Cup is likely to push its interim results "significantly above the corresponding period last year".

For the scheme to pay out for a second year, the group also has to achieve a new net debt/underlying earnings ratio of one to one-and-a-half times. Sports Direct said it had already hit this target.

One analyst said: "It is looking very good at this stage for Sports Direct's staff to trigger the share bonuses for this year as well. Maybe apart from the benefits of working for the John Lewis Partnership, Sports Direct's is arguably one of the best retail incentivisation schemes in the UK."