3rd Apr 2014 09:34
LONDON (Alliance News) - Shareholders of the UK's biggest sporting goods retailer by revenue, Sports Direct International PLC, have rejected a GBP72.5 million share bonus package for Mike Ashley, the company's founder, deputy chairman and biggest shareholder.
The package was due to be put to a vote on Friday at an annual general meeting, to consider the proposed supplemental executive bonus share scheme.
However the retailer late Wednesday cancelled the meeting and vote after the proposal failed to gather enough shareholder support.
"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," said Dave Singleton, non-executive director and chairman of the company's Remuneration Committee.
Last month, Sports Direct said the option grant would come with conditions. The award will be conditional on Sports Direct achieving earnings before interest, tax, depreciation and amortisation of GBP330 million for the current financial year which ends in April, and GBP410 million in fiscal 2015, as well as a net debt to EBITDA ratio of 1.5 times or less at the end of the 2015 fiscal year.
It had said that the award would vest in July 2018 if all the performance targets were met.
This not the first time that shareholders have rejected proposals for the bonus scheme. Billionaire Ashley, who has a 61.72% stake in the business he founded in 1982, has not been paid for his executive role at the company since the business was listed in February 2007, despite two previous attempts by the board to reward him.
"The final outcome is particularly disappointing given that a clear majority, over 60%, voted in favour of the original scheme proposed in September 2012, and we narrowly missed the required support for the Supplemental Executive Bonus Share Scheme," said Singleton.
The sports firm said that it is now planing to seek approval for a 2015 share bonus scheme, which would be put to a vote at the company's annual general meeting in September.
Sports Direct said that if shareholders approve the implementation of the 2015 bonus share scheme, an initial grant of options over 25 million shares, roughly a 4.2% stake in the company, would be made to eligible participants, including Ashley and other senior management.
However, again the option grant would come with conditions. It said that the grant of any options would be conditional upon the group reaching EBITDA targets of GBP480 million for the financial year ended April 2016, GBP570 million the following year, and GBP750 million by the financial year ended April 2019.
"Given his participation, Mike Ashley has informed the board that he will not exercise his shareholder rights to vote on any resolution to approve the 2015 bonus share scheme," said Singleton.
The group is scheduled to release a full-year pre-close trading statement on April 23.
In a trading update in February, Sports Direct said its gross profit grew by 15% in its fiscal third quarter, buoyed by double-digit revenue growth which was fuelled by strong growth in retail and online sales. It said it was confident it will meet its expectations for full-year underlying earnings.
Sports Direct shares were trading 0.3% lower at 904.00 pence per share Thursday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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