Sports Direct founder withdraws from bonus scheme

Mike Ashley Sports Direct founder Mike Ashley is also the owner of Newcastle United

Related Stories

The founder of sportswear retailer Sports Direct, Mike Ashley, has decided not to take part in the company's latest bonus scheme.

The surprise about-turn comes after executives made strenuous efforts recently to persuade shareholders to approve the deal.

Mr Ashley said he would not approach shareholders again regarding his remuneration until 2019.

Up to 3,000 other employees will still share in the £200m equity bonus scheme.

The company had refused to say how much of this would be allocated to Mr Ashley, who does not take a salary from the firm which he founded, and in which he holds a majority shareholding.

'Unhelpful speculation'

Keith Hellawell, non-executive chairman of Sports Direct, blamed "recent unhelpful speculation" surrounding Mr Ashley's potential share allocation under the bonus scheme for his decision to withdraw from it.

He said Mr Ashley - who is also the owner of Newcastle United - was "determined to ensure that there is the maximum number of shares available for the eligible employees."

The Association of British Insurers (ABI) and Local Pension Fund Forum (LPFF) which both hold shares in Sports Direct, had previously called on other investors to oppose the new bonus scheme before the 2 July vote.

The Institute of Directors (IoD), which had also previously criticised Sports Direct's corporate governance over Mr Ashley's participation in the bonus scheme, welcomed his withdrawal from it today.

Dr Roger Barker, director of corporate governance at the IoD, said "As a director, senior executive and major shareholder of Sports Direct, he [Mr Ashley] occupies a position of unique influence in the organisation.

"By taking this step, he is helping improve external perceptions of Sports Direct's governance, which will ultimately be beneficial to all stakeholders."

It was the board's third attempt to pay Mr Ashley a bonus since 2012 and in the event, 60% of shareholder votes were cast in favour.

The announcement of Mr Ashley's decision to withdraw from the bonus scheme comes the day before the retailer's annual results.

line
BBC business correspondent, Emma Simpson, writes:

So why has Mike Ashley performed this U-turn? He's clearly a man who likes to win. One institutional shareholder mused that winning the recent vote may have been more important to Mr Ashley than the bonus itself. He is already a billionaire and has pocketed hundreds of millions of pounds from Sports Direct's flotation in 2007.

But Mr Ashley may have finally bowed to pressure from investors. Although the controversial bonus scheme was approved, some institutional investors remain far from happy. For them, the bonus scheme was merely a symptom of a broader lack of corporate governance at Sports Direct.

I am told they were minded to vote against the re-election of the company's chairman, and potentially a host of other board members as well, at the annual general meeting in September. Either way, Mike Ashley has surprised the city once again and his staff will reap the rewards.

line

More on This Story

Related Stories

More Business stories

RSS

Business Live

  1.  
    07:50: AGA profits

    AGA says operating profit stood at £9.6m, but it booked £4.1m in pensions charges, £3.3m in fair value costs relating to its stake in Fired Earth - its tiles business - leaving it with £2.2m. But that's before £1.5m in net interest charges on its pensions deficit, which doubled in the year from £35m to £72m. That brought pre-tax profits down to just £700,000, and left AGA in no position to pay a dividend. But the company does expect market conditions to improve this year.

     
  2.  
    07:39: Vodafone
    The Hoff

    Vodafone has announced a plan to introduce a mandatory minimum maternity policy in all 30 countries in which it operates. By the end of 2015, all female employees will be offered at least 16 weeks fully paid maternity leave, as well as full pay for a 30-hour week for the first six months after they return to work. David Hasselhoff, however, will not be eligible.

     
  3.  
    07:27: AGA profits
    AGA Rangemaster

    AGA Rangemaster has reported a slight fall in an annual pre-tax profit to £700,000, compared with £1.1m a year earlier. It has also announced it will not be paying a dividend to shareholders.

     
  4.  
    DFS shares Via Twitter

    Retail analyst Nick Bubb tweets: The Chairman of DFS trumpets that it stands for "Dedication, Family and Success". Or Dull Furniture Sale? ;-) @NickBubb1

     
  5.  
    07:15: DFS shares
    DFS

    Buy one, get one half price! Furniture retailer DFS has priced shares at 255p - at the lower end of expectations. The stock starts trading at 0800 today and means the company will be valued at close to £550m.

     
  6.  
    07:02: Eurozone outlook BBC Radio 4

    One thing that may help the eurozone economy is a small but significant accomplishment by the ECB that appears to have gone largely unnoticed. That was last Autumn's asset quality review of the banks, by the ECB which "gave pretty much everybody a clean bill of help", says Mr Cameron Watt. "And that's allowing banks to sell assets off their balance sheets."

     
  7.  
    Greek economy Via Twitter Adam Parsons Business Correspondent

    Former Greek shipping minister @MVarvitsiotis tells #WUTM "we'll do whatever it takes...to stay in Eurozone...leaving would be a disaster" @AdamParsons1

     
  8.  
    06:47: Eurozone outlook BBC Radio 4
    Draghi

    Mr Cameron Watt tells Today: "There is a following wind which is the lower oil price and the material decline in the currency [euro] against the dollar". He says those factors should help boost the eurozone economy, although he he sceptical that it will do as well as ECB president Mario Draghi (pictured) suggested at his press conference on Thursday.

     
  9.  
    06:35: ECB bond buying BBC Radio 4
    The EURO logo is pictured in front of the former headquarter of the European Central Bank

    We're talking quantitative easing (QE) on the Today programme and why it pushes up stock markets. And Ewan Cameron Watt, global chief investment strategist at BlackRock, explains in the most clear terms. It is all about portfolio substitution, of course. "If I buy a whole lot of bonds and give you cash, you have now have to invest that cash," he says. "You don't want to buy bonds because of [current] negative yields, so it forces you to buy riskier assets, which inflates the prices of things like equities." Simples.

     
  10.  
    06:25: Alpacas! Radio 5 live
    Alpacas

    Let's face it - alpacas are a bit weird. But farming the cuddly critters appears to appeal to some who want to escape the rat race, alpaca farmer Mary-Jo Smith tells Wake Up to Money. She says alpaca wool is strong, luxurious and "just amazing to wear". The British Alpaca Society holds its annual show in Telford this weekend.

     
  11.  
    06:15: Insurers v banks Radio 5 live

    Aviva shares ended 7% higher yesterday and Ewen Cameron Watt, chief investment strategist at BlackRock, tells Wake Up to Money it is no surprise that insurers are doing better than banks. He says operating conditions for banks are getting tougher, but some insurers are opting to join forces.

     
  12.  
    06:05: Rangers FC
    A general view of the Ibrox Stadium, in Glasgow,

    It's a big day for Rangers FC as the club holds an emergency meeting where Dave King hopes to oust the board. However, there are question marks over King - who wants to become chairman - because of his convictions in South Africa for tax offences.

     
  13.  
    06:03: Matthew West Business Reporter

    Happy Friday everyone. Don't forget you can get in touch by email at bizlivepage@bbc.co.uk or via twitter @bbcbusiness.

     
  14.  
    06:00: It's Friday Chris Johnston Business Reporter

    Good morning and welcome to the last day of the working week. US unemployment figures are set to dominate the day and are out at 13:30. We'll bring you the reaction to those numbers and all the day's other business news as well.

     

Features

Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.