Mike Ashley in U-turn over Sports Direct share windfall
A bonus scheme at Sports Direct will no longer involve its founder Mike Ashley after he gave up his right to a potential multi-million pound windfall.
Mr Ashley's surprise U-turn comes days after the company won a two-year battle with shareholders over a suitable scheme for its deputy chairman.
The four-year plan, which has the potential to grant 25 million shares worth around £180m to 3,000 employees including Mr Ashley, came under fire from investor lobby groups as well as the Institute of Directors.
Sports Direct's remuneration committee, which had been due to decide on the number of shares available to Mr Ashley in the scheme, was told after discussions with the tycoon that he did not wish to participate.
Mr Ashley, who is owner of Newcastle United Football Club, has not received a salary or bonus since the retailer floated in 2007, although he netted £929m in the flotation and has since banked hundreds of millions of pounds selling shares in the business. He owns 58% of the company.
Chairman Keith Hellawell said Mr Ashley wanted to ensure that the bonus scheme, which recently rewarded some 2,000 staff with shares worth around £68,000, was used to incentivise staff and help the company meet targets.
He added: "Following recent unhelpful speculation surrounding his potential allocation, he is determined to ensure that there is the maximum number of shares available for the eligible employees." Mr Ashley has also said he does not expect any other incentive scheme to be proposed to shareholders over the four years of the current bonus plan.
To achieve the payout the firm's earnings will have to hit £480m at the end of the 2016 financial year and rise to £750m by 2019. In results due this week, Sports Direct is expected to report earnings of around £327.1m.
Part of Sports Direct's recent success has been put down to the company's employee bonus scheme, with the 2011 staff plan on track to reward more than 3,000 workers having surpassed two of the four targets. Sports Direct has around 400 UK stores, including 15 in Northern Ireland.