Mike Ashley, the billionaire founder of retail empire Sports Direct, finally accepted defeat today as he shocked the city by taking himself off the company’s bonus scheme.
He promised not to try to claim a bonus for at least four years, until the current scheme starts paying out in 2019.
His decision follows years of clashes with shareholders as the company made three failed attempts to persuade investors to pay him a huge cash bonus. But earlier this month, in a five-minute meeting, independent shareholders agreed to vote through a payment to the businessman when the company threatened to withdraw a lucrative £200 million bonus scheme from staff.
However, it left the company facing new accusations from institutional investor groups that its refusal to say how much of the bonus pot Ashley would receive was a sign of weak corporate governance.
Today chairman Keith Hellawell hit back at the criticisms. He said: “Following recent unhelpful speculation surrounding his potential allocation [Ashley] is determined to ensure that there is the maximum number of shares available for the eligible employees.”
Roger Barker, director of corporate governance at the Institute of Directors, said: “Mike Ashley is to be congratulated for recognising the governance concerns associated with this pay plan… By taking this step, he is helping improve external perceptions of Sports Direct’s governance, which will ultimately be beneficial to all stakeholders.”
Ashley, the executive deputy chairman, currently receives no pay from Sports Direct, although he is the biggest shareholder with a 58% stake.
Retail analyst Nick Bubb said: “No doubt the great man has worked out that if all the Sports Direct staff get the shares instead then they will work even harder to hit the [profit] targets and that he can get some income from getting the company to pay dividends.”
He pointed out that a 10p dividend would see Ashley pocket £30 million.
The employee bonus scheme — the third of its kind for Sports Direct — could see about 3000 full-time workers handed shares worth about three times annual salary.
Sports Direct also announced today that non-executive director Charles McCreevy, a former Irish government minister, will not stand for re-election at September’s AGM.
Any football fan on any terrace at any ground in England could tell you what Mike Ashley is doing by walking away from his £130 million share bonus package.
He is sticking two fingers up at the institutions who dared to buy shares In Sport Direct but who fought time and time again against his bonus. And he is sticking two fingers up at the City and its advocates for good corporate governance.
Well, what did you expect from a man who doesn’t speak at shareholders’ meetings held in remote locations, and flees the moment they end in his private helicopter?
Mike Ashley is worth a conservative £4bn. He owns 58% of Sports Direct. If he doesn’t take a bonus he could (as he’s done before) just sell a few of his 345 million shares. He could even go wild and start paying a dividend.
Never forget the way the City treated Ashley when Sports Direct first floated — with snobbish contempt. Anyone who has chosen to invest in the company knows what they are getting and should stop moaning.
Just be glad Ashley chose two fingers rather than the Poznan.