A shareholder revolt has forced Sports Direct to scrap a general meeting planned for Friday.
Problems centre on a controversial £66m bonus for the group's founder, Mike Ashley, who currently receives no salary or bonus from the retailer.
The company had proposed handing the "incentive" to its deputy chairman, Mr Ashley – the combative owner of Premier League Newcastle United – in the form of 8 million share options due to have paid out in 2018.
The general meeting was called last month to approve the executive bonus share scheme.
At the time it was reported that the largest institutional shareholder – the hedge fund manager Crispin Odey, who has a 7.3 per cent stake – had indicated that he would vote to approve the package. But late yesterday the company was embarrassingly forced to back down and cancel the meeting after admitting that the scheme would have been voted down by other shareholders.
Dave Singleton, the chairman of Sport Direct's remuneration committee, said: "During discussions with institutional shareholders, it became apparent that while we had the support of some of our largest shareholders, we had not been able to secure the requisite level of shareholder approval."
It is the second time a generous incentive for Mr Ashley has been vetoed by shareholders. In 2012 Sports Direct was forced to scrap a similar proposal.
But the fight to reward Mr Ashley – whose stake in the company he founded in 1982 is estimated at £3.2bn – is not over, Mr Singleton promised.
"We remain convinced of the benefit of aligning Mike Ashley's interests with those of all other shareholders," he said.
So the group will include Mr Ashley for the first time in its 2015 employee bonus share scheme which will be voted on by shareholders at its annual general meeting in September this year. The scheme will involve 25 million shares being handed out, around 4.2 per cent of its issued share capital. It is expected that Mr Ashley will be in line for a similar 8 million shares to that proposed in yesterday's scrapped scheme.
The new proposed bonus scheme will be conditional upon the company reaching profit targets of £480m in 2016, £570m in 2017, £650m in 2018 and £750m in 2019.
Ahead of the September shareholder vote, Sports Direct's chairman, Keith Hellawell, was yesterday talking up the benefits of the scheme to shareholders.
"Sports Direct's employee bonus share scheme is one of the most wide-reaching and successful employee reward schemes in the UK," he said. "The success of the scheme is demonstrated by the shareholder value created, with the share price reaching an all-time high this week and now almost seven times higher than when the 2009 employee bonus share scheme was approved by shareholders."
The group is due to release its full-year pre-close statement on 23 April.Reuse content