By Neil Maidment
April 2 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
"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
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
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
($1 = 0.6012 British Pounds)
(Editing by Kate Holton and Elaine Hardcastle)