TMCnet News

Sports Direct board rounds on shareholders over bonus plan rejection
[April 23, 2014]

Sports Direct board rounds on shareholders over bonus plan rejection


(Guardian (UK) Via Acquire Media NewsEdge) Sports Direct hit out at its shareholders yesterday for failing to back a lucrative bonus share scheme proposed for its billionaire founder Mike Ashley, as it posted another sharp rise in sales.

Earlier this month Britain's biggest sporting goods chain was forced to abandon a proposal to award majority shareholder Ashley a bonus share scheme worth some pounds 73m, after failing to gain enough investor support. It was the second time Sports Direct had to abandon a bonus scheme for its boss, whose stake in the retailer is worth more than pounds 2.8bn.



"The board was extremely disappointed to withdraw the resolution regarding a proposed share scheme award to Mike Ashley," chief executive Dave Forsey said in a statement.

Forsey suggested Sports Direct had been misled by investors - who had pledged support for the potential payout to the group's senior executives, but then changed their minds. Forsey added that the group's relationship with its shareholders could now be more difficult in the future.


The retailer has often had a difficult relationship with the City since it floated on the stock exchange seven years ago. Ashley once said that some City investors were "like a bunch of cry babies".

"The most disappointing aspect was where large shareholders gave their support only to then vote differently," said Forsey. "This outcome is likely to lead to further uncertainty in the future." The group, which has more than 600 sports stores in Europe, including 400 in Britain, said total sales rose 10.3% to pounds 360m ($606m) in the nine weeks to 30 March.

Sales in the group's smaller fashion arm, which trades under store names including USC and Cruise, rose 0.7%.

The rejection of the bonus scheme at the beginning of this month has sparked an eventful few weeks for Sports Direct, as shortly afterwards Ashley, who receives no salary or other bonus from Sports Direct, announced he had sold pounds 200m of shares, cutting his stake in the retailer by 4% to 57.7%, causing a wobble in the firm's share price. Ashley, whose career in retail began when his parents lent him pounds 10,000 to open his own shop, remains the driving force behind the retailer.

At the same time, the group also surprised investors by snapping up an 11% stake in Britain's House of Fraser from entrepreneur Sir Tom Hunter just as the department store was finalising its sale to China's Sanpower Group.

Sports Direct, whose raft of cut price label and own-brand offerings have proved popular with British shoppers, said it was very confident of at least meeting its full-year core earnings target of pounds 310m before staff bonus charges.

Shares in the firm, which now aims to include Ashley in a share scheme for all eligible staff and management, closed on Tuesday at 797p, down 33p or 3.9%. However the stock is still up more than 80% on a year ago, valuing the business at almost pounds 5bn. After a shaky start on the stock market in 2007, Sports Direct's shares have nearly tripled in price.

pounds 73m Value of the bonus share scheme Sports Direct had proposed to award to its majority shareholder Mike Ashley (c) 2014 Guardian Newspapers Limited.

[ Back To TMCnet.com's Homepage ]