Sports Direct in Third Attempt to Gain Bonus for Founder
Sports Direct International Plc (SPD), the U.K.’s biggest sporting-goods retailer, is making a third attempt to get shareholders to approve a bonus for billionaire founder Mike Ashley.
Investors will be asked at next month’s annual meeting to back the company’s 2015 Bonus Share Scheme, in which Ashley is currently eligible to participate, Sports Direct said in a statement today.
Shareholders in April rejected a bonus package for the 49-year-old that would have given him 8 million shares, worth 65 million pounds ($109 million) at current prices. Ashley, who owns a 58 percent stake in the company, has yet to receive a salary for his role as deputy chairman.
“The board and the remuneration committee have responded to the feedback received from shareholders to develop a long-term share incentive scheme which not only will continue to motivate the company’s employees, but which also recognizes and rewards the substantial contribution made by Mike Ashley over many years,” Chairman Keith Hellawell said in a statement.
Sports Direct canceled plans for a shareholder vote on its most recent bonus proposal after it became clear that the measure had insufficient support. A previous plan two years before also didn’t make it to a vote.
Ashley, who founded the company in 1982, has an estimated wealth of about $6.5 billion, according to the Bloomberg Billionaires Index. The executive, who also owns Premier League soccer club Newcastle United, has led an expansion of the retailer to about 400 stores in the U.K. and about 270 in 19 other European countries.
The terms of the 2015 bonus plan provide for the grant of no-cost options over as many as 25 million ordinary shares, amounting to about 4.2 percent of the share capital. For employees to receive the bonus, the company must achieve earnings before interest, tax, depreciation and amortization of 480 million pounds in 2016, 570 million pounds in 2017, 650 million pounds in 2018 and 750 million pounds in 2019.
If the performance targets are all met, a quarter of the award would be paid after the announcement of the company’s 2019 results and the rest after the 2021 earnings.
“Based on the stretching performance targets established, this scheme has the potential to create a further substantial increase in shareholder value,” Hellawell said.
Sports Direct rose 1.4 percent to 824 pence at 12:02 p.m. in London, valuing the company at about 4.9 billion pounds. The stock has risen about 56 percent in 12 months and is trading at more than 19 times its price at the end of 2008.
(Earlier versions of this story corrected the size of Mike Ashley’s shareholding and the currency his wealth is stated in.)
To contact the editors responsible for this story: Celeste Perri at firstname.lastname@example.org Kim McLaughlin, David Risser