16th Jul 2014 10:01
LONDON (Alliance News) - Sports Direct International PLC said Wednesday that Executive Deputy Chairman Mike Ashley, has withdrawn from the company's 2015 Bonus Share Scheme, just weeks after shareholders finally voted in favour of Ashley getting his first share bonus since the company listed in 2007.
In an about-turn following extensive discussions with the board and shareholders over revised bonus scheme proposals - the company's shareholders have voted against paying Ashley any pay or bonus on three separate occasions - Sports Direct's founder and biggest shareholder said that he does not wish to be awarded any shares under the now-approved 2015 Bonus Share Scheme.
Investors have taken the news well Wednesday; the stock trades 1.06% higher at 712.00 pence mid-morning.
At the beginning of July the company's shareholders voted in favour of its 2015 Bonus Plan for executives, in a move that would have resulted in founder Ashley receiving his first remuneration since the company listed in 2007.
While Sports Direct proposed a new bonus scheme for executives, based on performance targets, just under 40% of shareholders still voted against the latest proposal.
Sports Direct said Ashley has informed the board and remuneration committee that he does not expect any other share-based incentive scheme to be proposed to shareholders in relation to his role as an executive director of Sports Direct.
The new approved share scheme will grant those included in the plan no-cost options over 25 million shares, as long as certain earnings before interest, tax, depreciation and amortisation performance targets are met.
The new shares represent about 4.2% of the company, and are worth GBP177.7 million in total at current prices, as the retailer has seen a dip in its stock since the proposal was approved.
"Mike's focus is on ensuring that the scheme aligns all employees to achieve the Company's objectives. Following recent unhelpful speculation surrounding his potential allocation, he is determined to ensure that there is the maximum number of shares available for the eligible employees," said Non-Executive Chairman Keith Hellawell.
The "eligible employees" means that around 3,000 full-time employees at the UK's biggest sporting goods retailer by revenue will get a bigger share of the 25 million share handout if all the retailer's performance targets are met.
The 2015 Bonus Scheme's performance targets are EBITDA of GBP480 million in the financial year 2016, GBP570 million in 2017, GBP650 million in 2018 and GBP750 million in 2019. If these targets are all met, 25% of any award would vest after the company's results in 2019, and 75% after its results in 2021.
In fiscal 2013, the company made EBITDA, excluding exceptional costs and some other charges, including the costs of previous company share bonus schemes, of GBP287.9 million, up from GBP235.7 million in fiscal 2012.
Ashley holds 57.71% of Sports Direct shares, after selling a 4% interest in the company for GBP204 million just days after the previous proposal was shut down by investors in April.
Billionaire Ashley, who founded the company back 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.
Sports Direct reported double digit growth in its gross profit and sales in the last nine weeks of its financial year to March 30, driven by strong retail growth both in its stores and online.
Earlier tihs week, the sports retailer also announced that it has partnered with online retailer MySale Group PLC to launch a Sports Direct offering in Australia and New Zealand. Sports Direct bought a 4.8% stake in MySale last month.
The company will Thursday report its full-year results for 2014.
By Alice Attwood; [email protected]; @AliceAtAlliance, additional reporting by Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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