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 region.
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)