* Scheme approved on July 2 despite significant opposition
* Ashley rules out further bonus proposal until 2019
* Analysts speculate firm may now pay dividend to reward Ashley
* Shares up 0.8 pct (Adds details, analyst comment, writes through)
By Neil Maidment and James Davey
LONDON, July 16 (Reuters) - Sports Direct’s founder Mike Ashley has quit the sportswear retailer’s controversial new 200 million pounds ($343 million) bonus share scheme just two weeks after it unexpectedly drew the backing of independent shareholders.
The British company said on Wednesday that after talks with the board’s remuneration committee, executive deputy chairman Ashley had informed the board he did not wish to be awarded any shares under the 2015 scheme.
Sports Direct’s non-executive chairman Keith Hellawell blamed “recent unhelpful speculation” surrounding the size of Ashley’s potential payout for his withdrawal from the scheme.
The Sports Direct board has been wrestling for years over how to reward Ashley, the driving force behind the company’s rise to dominance of the UK sportswear market. Ashley, who also owns English Premier League soccer club Newcastle United, owns 58 percent of Sports Direct but receives no salary or bonus.
The retailer has not paid a dividend since floating in 2007. However, analysts speculated that Ashley’s move to shun the bonus could prompt a re-think.
The board proposed a 2015 bonus scheme that would have awarded Ashley a multimillion-pound payout, but it attracted fierce criticism from shareholder groups and corporate lobbyists, unhappy that a major investor could receive a bonus, even if he was an executive.
British business lobby group the Institute of Directors (IoD) criticised the plan as “excessively generous” and said it was suggestive of “weak underlying governance at the company.”
The bonus scheme, however, got the go-ahead at the fourth time of asking on July 2 when 60.4 percent of independent investors voted to back a plan which would pay out up to about 200 million pounds to Ashley, as well as an undisclosed number of Sports Direct directors and other employees, if earnings more than double over the next five years.
Sports Direct refused to say what slice of the payout would have been awarded to Ashley. However, some shareholders, irked at the scheme’s approval, were planning to vote against the re-election of Hellawell and other board members at the company’s annual general meeting in September, according to media reports.
Ashley, whose Sports Direct empire has grown from one shop in southeast England in 1982 to around 400 stores in Britain with more in Europe, said that he did not expect any other bonus plan to be put before investors while the existing one runs until 2019.
Hellawell said Ashley remained fully committed to achieving the scheme’s related earnings’ targets.
“Regarding the allocation of shares, Mike’s focus is on ensuring that the scheme aligns all employees to achieve the company’s objectives,” he said, adding “he is determined to ensure that there is the maximum number of shares available for the eligible employees.”
The chairman also stressed the success of previous company-wide schemes.
Part of Sport Direct’s rise to prominence has been down to its fleet-footed acquisition strategy and with its sights now turning to an enlarged European footprint its management has said it would continue to refrain from paying dividends while it saw opportunities to grow.
However, independent retail analyst Nick Bubb said that stance could soften now that Ashley has ruled out bonus payments.
“I wouldn’t be amazed to see a final dividend (in Sports Direct’s full-year results on Thursday) and I would certainly expect a commitment to future payments, even with acquisitions,” he said, noting a 10 pence dividend would provide Ashley with well over 30 million pounds.
Shares in Sports Direct, which entered the FTSE 100 Index in September, were up 0.8 percent at 710 pence at 1039 GMT, valuing the business at just over 4.2 billion pounds. ($1 = 0.5838 British pounds) (Editing by Kate Holton and Susan Fenton)