By Neil Maidment
LONDON, July 18 Sports Direct, Britain's
biggest sporting goods retailer, scrapped plans to pay its
billionaire founder Mike Ashley a bonus worth some 60 million
pounds on Thursday, saying it would look for other ways to
reward him for its rapid growth.
Ashley, who founded the company in 1982, has not taken a
salary since Sports Direct floated in 2007, during which time
its share price has doubled. He has also provided significant
free advertising for it through his ownership of English Premier
League soccer club Newcastle United.
The firm, which announced a 40 percent surge in annual
profit on Thursday, first proposed a share bonus for Ashley 18
months ago but was knocked back by shareholders on the grounds
that the attached performance targets were too limited. Its
second proposal, announced in December, increased both targets
and the number of shares, from 8 million to 10 million to vest
in 2018 - worth around 63 million pounds at Thursday's prices.
Sports Direct's chief executive Dave Forsey said on Thursday
it was now too late to put this proposal to shareholders and
that it would instead explore alternatives. He gave no details
about why the plan had not been put to shareholders before now.
"We are obviously very keen to look at how we can reward
Mike because he's absolutely making a massive difference to our
business," Forsey told reporters.
By contrast the firm said having hit its financial targets,
it would hand shares worth around 130 million pounds to some
2,000 of its 24,000 staff, including full-time shop assistants.
Under the firm's bonus scheme started in 2009, the average
employee earning 20,000 pounds who has been with the firm at
least five years will receive 12,000 Sports Direct shares worth
around 75,000 pounds at the current share price.
The company said staff were on track for another payout in
2015 through another scheme.
Sports Direct posted an underlying pretax profit for the
year to April 28 of 208.1 million pounds ($316 million), up 40
percent on the year before, thanks to higher margins and
business boosted by a sporting backdrop of the European Soccer
Championships and London Olympics.
The group added that first quarter trading had started ahead
of management expectations, but cautioned that an absence of
major sporting events this year would make it hard to sustain
that level of performance.
Shares in the firm, which owns Sports World and Lillywhites
stores as well as brands like Slazenger and Dunlop, hit an
all-time high of 640 pence in early trading and were up 4.6
percent to 628.5 pence at 1030 GMT.
Sports Direct now operates in 19 countries in Europe,
including Belgium, Slovenia, Portugal and France. It expanded
its fashion brands with the acquisition of UK retailer Republic
from administration and doubled the size of its international
business to 20 percent of sales after buying majority stakes in
two European sporting goods retailers in Austria and the Baltic
It said it was aiming to open eight to 12 new stores and
expand to two to three new territories across Europe in the new
fiscal year, and would continue not to pay a dividend while it
saw further opportunities to grow.
The company added it was targeting underlying earnings
before interest, tax, depreciation and amortisation (EBITDA) of
310 million pounds for 2013-14. ($1 = 0.6591 British pounds)