Staff at Sports Direct were popping open the champagne yesterday, after the company said it would hand them shares worth more than £75,000 each as a reward for soaring profits.
But the group has decided not to put to shareholders a “super-stretch” bonus share scheme for founder Mike Ashley, the owner of Newcastle United Football Club, and is considering other options to reward the billionaire, who does not take a salary from the firm.
Sports Direct is to award 2,000 staff an average of 12,000 shares each next month, worth £75,000 each, equal to a pot of £150m. This is in addition to the typical share award of £15,000 that Sports Direct gave employees, with an average salary of £20,000, last year.
The scheme is easily the retail sector’s most lucrative for shop-floor staff and puts even the much-vaunted John Lewis Partnership, the owner of the eponymous department store and grocer Waitrose, in the shade.
Sports Direct posted underlying profit up by 22 per cent to £287.9m over the year to April 28 – a bumper 12 months for sport – which powered past its target of £250m set under the 2011 bonus share scheme.
Despite its barnstorming performance, the retailer again refused to pay a dividend, explaining that it wants to preserve its cash pile, largely for potential acquisitions in Europe.
The group is on track for entry into the FTSE 100 after a meteoric rise in its shares, which had fallen to as low as 32p in December 2008 after its float at 300p the previous year. While Sports Direct was helped by the collapse of rival JJB Sports last year, its model of cut-throat pricing and acquiring sports brands, which it licenses to retailers globally, has seen it thrive.
The group’s chief executive, Dave Forsey, said the bonus programme had been a “game changer”, explaining it had helped to slash staff turnover from 30 per cent to just 15.5 per cent.
Mr Forsey, who was appointed in 1984, said: “It [the scheme] has enabled us to invest and for them [staff] to feel very much part of everything we do.”
Boosted by, among other events, last year’s Olympics, and acquisitions and new stores, Sports Direct’s revenues jumped by 20.9 per cent to £2.19bn, including booming online sales. The retailer will not ask shareholders to vote at its annual meeting next month on the “super-stretch” bonus scheme for Mr Ashley, which it had considered raising to profits of £310m for 2014.
Not enough shareholders had backed the initial target of £290m, and based on its strong performance, Mr Forsey said: “The super-stretch target does not now seem super.”