Sports Direct goes on the attack after Mike Ashley bonus vote
Failure to vote for the resolution could put in doubt an extension of the lucrative employee bonus scheme
Wednesday 23 April 2014
Mike Ashley’s Sports Direct has launched an attack against its institutional investors, warning of “further uncertainty” after they refused to back a multi-million-pound payout to the billionaire founder.
Chief executive Dave Forsey said the board, which includes Ashley, was “extremely disappointed to withdraw the resolution regarding a proposed share scheme award to Mike Ashley. The most disappointing aspect was where large shareholders gave their support only to then vote differently. This outcome is likely to lead to further uncertainty in the future.”
The company hoped shareholders would wave through an award of 8 million shares to Ashley, worth £65 million at today’s share price, if certain targets were hit between now and July 2018.
However, it soon became clear the resolution would not pass — biggest shareholder Ashley would abstain — and the resolution was dropped just days before the AGM. In response, Ashley dumped £200 million of shares and snapped up an 11 per cent stake in House of Fraser.
A similar resolution was also dropped in 2012 for the same reasons, although this time round Sports Direct said it had the support of the biggest independent shareholder, Odey Asset Management.
A source close to Sports Direct suggested the failure of shareholders to vote for the resolution could put in doubt an extension of the lucrative employee bonus scheme, which has seen the top 10 per cent of employees given bonuses worth three times their salary.
However, shareholders have always voted in favour of the employee scheme, with some thought to believe the targets set in Ashley’s own award payout did not stretch him enough.
Today the company revealed sales up 10.3 per cent to £360 million for the nine weeks to end of March, with gross profit up 11.5 per cent to £147 million.
Sports retail sales were up 11 per cent to £293.3 million and gross profit up 14.9 per cent to £120.4 million, but in the premium lifestyle division, which includes USC, Republic and Flannel, sales only grew 0.7 per cent and profits fell by 4.1 per cent.
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