UPDATE 1-Sports Direct pulls Ashley bonus plan on shareholder opposition
April 2 (Reuters) - Britain's Sports Direct has scrapped plans for a shareholder vote on a share bonus scheme worth 73 million pounds ($121 million) for its founder Mike Ashley after failing to secure enough support.
Britain's biggest sporting goods retailer had planned to put a proposal to grant Ashley 8 million ordinary shares, worth about 73 million pounds at its current share price of 907 pence, to a vote this Friday.
Executive Deputy Chairman Ashley, who holds a 62 percent stake in the firm he founded in 1982, receives no salary or other bonus from Sports Direct. Shares in the company have more than doubled in a year and the firm joined the FTSE 100 index in September.
"During our on-going 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," the firm said in a statement on Wednesday.
"While the board is disappointed that this resolution will not now be passed, we respect shareholders' views. We remain convinced of the benefit of aligning Mike Ashley's interests with those of all other shareholders."
Sports Direct, which has over 600 sports stores in Europe, including 400 in the UK, grew rapidly during the economic downturn on demand for its value offers, supported by a mixture of acquisitions, expanding online sales and the demise of rivals like JJB Sports.
The bonus scheme was the third attempt by Sports Direct's board to reward its founder in recent years. One previous proposal was knocked back by shareholders due to concerns over the related performance targets, and another failed to be put to a vote.
Based on more shareholder feedback Sports Direct said it would seek approval for a 2015 bonus share scheme for all eligible staff and senior management, including Ashley at its AGM in September. Ashley, also owner of soccer club Newcastle United, will not vote.
If approved an initial grant of 25 million ordinary shares would be made to participants if core earnings targets of 480 million pounds in 2016, 570 million in 2017, 650 million in 2018 and 750 million in 2019 are met. The firm is expected to post 2014 core earnings of 324 million pounds, according to Reuters data.
Liberum analyst Sanjay Vidyarthi said: "Ultimately I am surprised it wasn't approved. The (new) targets are pretty ambitious, I guess that's the point of encouragement to take out of it."
($1 = 0.6012 British Pounds) (Editing by Kate Holton and Elaine Hardcastle)