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UPDATE 2-Sports Direct tries again to win backing for new Ashley bonus
June 9, 2014 / 8:36 AM / 3 years ago

UPDATE 2-Sports Direct tries again to win backing for new Ashley bonus

(Adds reaction from analysts, details on previous bonus attempts )

LONDON, June 9 (Reuters) - Britain’s Sports Direct has convened a shareholder meeting to try to win backing for a new bonus scheme that would pay out to Mike Ashley, in its fourth attempt at rewarding the company’s founder.

Britain’s biggest sporting goods retailer had to scrap plans in April for a vote on a share bonus scheme worth 73 million pounds ($122.57 million) for Ashley after failing to win enough support.

Ashley, who also owns soccer club Newcastle United, founded the firm in 1982. It has grown rapidly during the economic downturn on demand for its value offers and now has more than 600 sports stores in Europe, including 400 in Britain.

Despite the success, Executive Deputy Chairman Ashley receives no salary or other bonus from Sports Direct.

Previous attempts to pay out to Ashley have been quashed by shareholders who thought the company’s targets were too limited in scope.

On Monday the company set out a new plan, with a 2015 company-wide scheme dependent on what it said were more stretching earnings targets over a longer timeframe. Under the proposal, earnings would need to more than double by the end of the period in 2019.

Numis analyst Andrew Wade said the targets represented an “exceptional medium term growth trajectory”, although he noted that with no reference in the targets to net debt ratios, much of the growth could be driven by acquisitions.

“We retain our positive stance on Sports Direct, seeing significant scope for the group to build on its leading position in the UK and expand aggressively into Europe,” he said.

Chairman Keith Hellawell said the board and remuneration committee had responded to the feedback from shareholders.

“(This is) a long-term share incentive scheme which not only will continue to motivate the company’s employees but which also recognises and rewards the substantial contribution made by Mike Ashley over many years,” he said.

The failed bonus scheme in April 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 that the targets it set were too easy to achieve, and another failed to be put to a vote.

Days after the April vote failure, shares in Sports Direct fell after Ashley cut his stake. He now owns around 58 percent.

Under the new plan, the scheme would grant up to 25 million ordinary shares in the company to eligible employees, including executive directors, amounting to around 4.2 percent of the issued share capital of the company.

The earnings targets run from 2016 to 2019. If the targets are met, 25 percent of any award would vest following the announcement of company results in July 2019, and the rest would vest in 2021.

$1 = 0.5956 British Pounds Reporting by Kate Holton, Editing by Paul Sandle and Louise Heavens

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