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Mike Ashley in fourth attempt to secure Sports Direct bonus Mike Ashley in fourth attempt to secure Sports Direct bonus
(about 9 hours later)
Mike Ashley’s Sports Direct warned shareholders that if they do not vote through a new bonus package for the billionaire founder, staff could lose out on life-changing bonuses. Mike Ashley’s Sports Direct has threatened to pull a life-changing bonus scheme for its shop floor and warehouse staff unless shareholders agree to a multi-million-pound bonus payment to its billionaire founder.
In its fourth attempt to give Ashley a bonus, the board has scrapped plans for an individual payment for Ashley after years of shareholder revolts. Instead it proposed adding him alongside 3000 staff who could get a 25 million-share bonus pot worth £200 million at today’s price if they hit stringent profit targets. The retailer has attempted to pay Mr Ashley a one-off bonus three times in the past three years, but has been blocked by shareholders on each occasion.
But Sports Direct, which also own brands including USC, Republic and Slazenger, declined to reveal how many of the free shares Ashley would receive, although they are expected to be worth tens of millions of pounds. The most recent failure was in April when a shareholder meeting was cancelled just days before it was due to take place after it became clear the vote for a £73m payout would not pass.
Shareholders will be asked next month to vote through the resolution at the company’s  AGM after a previous meeting organised for April was cancelled when it became clear that they would reject a £73 million payout to Ashley. Yesterday, the company, which also owns brands such as USC, Republic and Slazenger, said Mr Ashley’s payment would come from a bonus scheme intended for 3,000 full-time staff who would enjoy a 25 million-share pot worth £200m if they hit stringent profit targets.
The board of Sports Direct has attempted sweet-talking and strong-arming investors into making a payment to Ashley — who sits as deputy executive chairman but has not taken a salary — for several years but to no avail. Sports Direct declined to reveal how many of the free shares Mr Ashley would receive, although they are expected to be worth tens of millions of pounds.
They tried to explain the importance of handing the Newcastle United owner a payout in 2012, saying that it would be right to reward Ashley for his contribution to the company. Then earlier this year they hit out at shareholders, claiming that rejecting the award could cause future uncertainty about the business. Shareholders will be asked next month to vote through the resolution at the annual meeting. A £39m payout was rejected in 2012 by shareholders; the board promised to introduce a new bonus scheme in 2013 but decided against putting one forward after shareholders privately expressed doubts; and a third rejection took place in April.
Today, the company set out the details of the latest scheme, which could see its value double to £10 billion in just five years. Underlying profits must hit £480 million in 2016,  £570 million in 2017, £650 million in 2018 and £750 million in 2019 for it to pay out. Some shareholders welcomed the new scheme, suggesting the targets were positive. The board of Sports Direct has attempted sweet-talking and strong-arming investors into making a payment to Mr Ashley – who sits as deputy executive chairman but has not taken a salary – for several years but to no avail.
Sports Direct’s biggest institutional shareholder, Odey Asset Management, which has a 7.3 per cent stake, backed the new proposals, having previously supported paying Ashley a bonus. In 2012 they tried to explain the importance of handing the Newcastle United owner a payout, saying it would be right to reward Mr Ashley for his contribution to the company he founded and pocketed £1bn from after its float.
Founding partner Crispin Odey told the London Evening Standard: “I just think he is a genius but he is also someone who needs motivating and that is what we are happy to do.” Then earlier this year they hit out at shareholders, claiming that rejecting the award could cause future uncertainty about the business.
Yesterday the company set out the details of the latest scheme, which could see its value double to £10bn in just five years. Underlying profits must hit £480m in 2016,  £570m in 2017, £650m in 2018 and £750m in 2019 for it to pay out. Some shareholders welcomed the new scheme, suggesting the targets were positive.
Sports Direct’s biggest institutional shareholder, Odey Asset Management, which has a 7.3 per cent stake, backed the new proposals, having previously supported paying  Mr Ashley a bonus.
Its founding partner Crispin Odey said: “I just think he is a genius but he is also someone who needs motivating and that is what we are happy to do.”
If the vote fails, it would see workers miss out on big cash bonuses similar to those made in recent years. Store managers earning £30,000 a year received bonuses worth as much as £70,000.If the vote fails, it would see workers miss out on big cash bonuses similar to those made in recent years. Store managers earning £30,000 a year received bonuses worth as much as £70,000.
However, the vast majority of staff will not be entitled to a payout, with 90 per cent of employees on controversial zero-hour contracts.However, the vast majority of staff will not be entitled to a payout, with 90 per cent of employees on controversial zero-hour contracts.
The widespread use of the contracts has led to politicians and campaigners calling for a reform of employment laws, citing Sports Direct as an employer that is abusing the system.