Sports Direct’s Ashley Withdraws From Criticized Bonus PlanClementine Fletcher
Sports Direct International Plc said billionaire founder Mike Ashley won’t take up any shares that were due to be awarded to him in a widely criticized bonus plan that was given the go-ahead by investors this month.
After discussion with the company’s remuneration committee, Ashley informed the board he “does not wish to be awarded any shares,” Sports Direct, the U.K.’s biggest sporting-goods retailer, said in a statement today. The company’s deputy chairman doesn’t expect any other share-based incentive plan to be proposed in relation to his role, it said.
Sports Direct has received opprobrium about its pay plans for 49-year-old Ashley, who owns a 58 percent stake in the retailer yet has never received a salary. The proposed bonus, the potential size of which the company has declined to disclose, was supported by 60.4 percent of shareholders on July 2, though was described as “excessively generous” by the U.K. Institute of Directors at the time.
“Regarding the allocation of shares, Mike’s focus is on ensuring that the scheme aligns all employees to achieve the company’s objectives,” Keith Hellawell, the company’s non-executive chairman, said in the statement. “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.”
Ashley’s decision perplexed analysts after the company fought so hard to push the share bonus through. Shareholders rejected a pay package in April that would have given him 8 million shares, worth 57 million pounds ($98 million) at current prices. A prior proposal also failed.
“Maybe Mike realized that he would end up getting too much of the share scheme and would thus squeeze out the staff, which would be counter-productive,” Nick Bubb, an independent retail analyst in London, said in a note. “Plenty of people thought Mike Ashley shouldn’t need any more motivation, given his huge shareholding in the company.”
Ashley, who founded Sports Direct in 1982 and who also owns Premier League soccer club Newcastle United, has an estimated wealth of about $6 billion, according to the Bloomberg Billionaires Index.
Sports Direct rose 0.6 percent to 708.5 pence at 8:36 a.m. in London trading. The stock is little changed in 2014 after gaining more than 80 percent in each of the last two years.
The retailer is due to report full-year results tomorrow.