Sports Direct turmoil after bonus plan collapses
Sports Direct turned on its shareholders yesterday following the collapse of a plan to award founder Mike Ashley a potential windfall worth more than £70m.
Chief executive Dave Forsey accused large shareholders of backtracking on their original support for the incentive scheme, which would have handed Mr Ashley eight million shares if targets were met this year and next.
The rebellion marked the second time in less than two years that a bonus scheme for the Newcastle United owner had been rejected by shareholders.
Mr Forsey said the company was "extremely disappointed" by the latest rejection and warned that the outcome was likely to lead to further uncertainty.
His comments came as Sports Direct announced more strong trading, with sales from its core sports shops up 11% to £293.3m in the nine weeks to March 30. Profits for the division were up 14.9% to £120.4m.
The group needed more than 50% of investors to approve the incentive scheme at the company's annual meeting earlier this month, but it is thought some large shareholders were worried the plans were not in line with corporate best practice as they did not involve other company executives.
Mr Ashley – deputy executive chairman at the retailer – has not received a salary or bonus since the retailer floated in 2007.
But 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 just under 58% of the group.
Mr Forsey said: "The board was extremely disappointed to withdraw the resolution regarding a proposed share scheme award to Mike Ashley.
"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."
Part of Sports Direct's recent success has been put down to the company's employee bonus scheme, which last summer rewarded some 2,000 staff with shares worth around £68,000.
The 2011 staff scheme is also on track to reward more than 3,000 staff having already surpassed two of the four earnings targets. It said it was "very confident" of achieving at least its full-year underlying earnings target of £310m.