While Mike Ashley, the maverick founder of Sports Direct, was being quizzed by U.K. lawmakers on Tuesday on paying his workers below the minimum wage, he was racking up a handy profit.
The value of Ashley's 55 percent stake in Sports Direct rose by about 13 million pounds ($19 million) while he was being grilled by -- or rather, winning over -- members of parliament.
There was an even bigger rally by the end of the day, on relief that the unpredictable Ashley defied expectations that he would grunt one-word answers or explode in temper -- it was only after a series of contentious letters between himself and the head of the Parliamentary panel investigating working practices at his company that he even agreed to attend the hearing. Instead, he'd insisted that Sports Direct would "pull its socks up" on the way it treats its staff.
So over the whole day, the value of his holdings went up by about 65 million pounds from the previous day's close to about 1.3 billion pounds.
But Ashley's paper profit might just be on loan. He's pledged to change within 90 days a "six strikes and you're out" policy that was one of the items that had attracted lawmaker's attention (workers could get a strike for getting a drink of water outside set break times). He also indicted that he would be comfortable with an independent review of Sports Direct's corporate governance -- although he didn't commit to this or put any time frame on it.
Investors have long criticized the company's corporate governance and remuneration policies, such as the decision to lower earnings targets connected to a bonus share program for staff in order to boost the chance of it paying out millions of pounds. An independent review of boardroom practices might just be something that shareholders seize on.
At least with the big boost to the value of his stake, Ashley will have a financial incentive to come back and face MPs again, if he doesn't live up to his promises.
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