By Neil Maidment and James Davey
LONDON, March 11 Britain's biggest sporting
goods retailer Sports Direct has proposed a share bonus
award worth 65 million pounds ($108 million) for its founder
Mike Ashley that will pay out if the firm beats the profit
targets of an existing staff bonus scheme.
Ashley, who holds a 62 percent stake in the company he
founded in 1982, receives no salary or other bonus from Sports
Direct, despite being a key figure in its success and generating
free advertising for it through his ownership of English Premier
League soccer club Newcastle United.
On Tuesday the firm proposed to grant Ashley 8 million
ordinary shares, worth about 65 million pounds at its current
share price of 823 pence, in recognition of his contribution.
The shares will vest in July 2018 if the firm achieves
earnings before interest, tax, depreciation and amortisation
(EBITDA) of 330 million pounds ($549 million) for the year to
April 2014 and 410 million pounds for 2015, as well as a net
debt/EBITDA ratio of 1.5 times or less at the end of its 2015
The targets for Ashley are tougher than those set for the
firm's employee bonus scheme, which requires Sports Direct to
hit full-year EBITDA of 310 million pounds and 360 million
pounds for 2014 and 2015 respectively.
One analyst who did not wish to be named said Ashley's
target of 330 million pounds was in line with 2014 consensus
forecasts but that his 2015 target represented an upgrade.
"The outer year (2015) is more interesting. Consensus is 375
million pounds EBITDA, so this is 35 million pounds ahead of
that," he told Reuters.
Shares in Sports Direct, up 88 percent on a year ago, were
1.7 percent higher to 823 pence at 0839 GMT.
"The company has already received support from its largest
institutional shareholder, Odey Asset Management, who has
confirmed that it intends to vote in favour of the resolution,"
Sports Direct Chairman Keith Hellawell said.
"The board believes that Mike is one of the outstanding
retailers of his generation and that all shareholders benefit
from his on-going commitment to Sports Direct."
Analysts at Espirito Santo noted that the net debt target
within Ashley's bonus proposal also meant Sports Direct would
not be able to buy British department store chain Debenhams
for cash and remain within the target.
Sports Direct has not said it plans to buy Debenhams but is
in talks to strike a partnership with the firm.
The proposal is the third attempt by Sports Direct's board
to reward its founder. 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.
The new proposal will be put to shareholders at a meeting on
April 4. Ashley will not vote his holding.
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 firm's shares entered Britain's blue-chip FTSE 100 index