Sports Direct boss plays for elusive bonus

Shareholders due to decide on proposals in July

Mike Ashley founded Sports Direct in 1982 and has built it into Britain’s biggest and most successful sports retailing chain. Photograph: Stu Forster/Getty Images

Mike Ashley founded Sports Direct in 1982 and has built it into Britain’s biggest and most successful sports retailing chain. Photograph: Stu Forster/Getty Images


When you’re already one of Britain’s richest men, with an estimated fortune of almost £4 billion, what motivates you? In the case of Mike Ashley, the maverick boss of Britain’s biggest sports retailing chain, the answer may be more money – and the chance to get your own back on the City.

Just two months after abandoning plans to award a £73 million bonus package to Ashley in the face of fierce shareholder opposition, his Sports Direct group has come up with another, equally controversial, bonus proposal.

Ashley, who also owns Newcastle United football club, is regarded as one of the most talented retailers of his generation. He founded the business in 1982 and has built it into Britain’s biggest and most successful sports retailing chain. He remains the majority shareholder, with a stake of 58 per cent, but, despite his position as executive deputy chairman, has not taken a salary since the business went public in 2007, when he cashed in shares worth some £1 billion.

The City would far rather see the Sports Direct founder rewarded with a conventional salary or with dividend payments, but no dividends have been declared since 2009.

Explaining this latest attempt to force through bonus payments for the boss, key Sports Direct shareholder 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.”

Odey is clearly in the Ashley camp but many other shareholders are not. However, they have a tricky decision ahead of them when the latest proposals are put to the vote next month – instead of a separate scheme for Ashley, his proposed bonus is now tied up with the wider employee plan. So a No vote for Ashley also means no payouts for the several thousand staff, from warehouse workers to shop assistants and managers, who enjoyed windfalls of up to £70,000 last year.

The new scheme would see 25 million free shares, representing 4.2 per cent of the group and worth £200 million – handed to the 3,000 eligible employees, including Ashley.

But there’s another problem. Sports Direct is refusing to say how just what proportion of those shares Ashley will receive, making it impossible for shareholders to know what they are voting for.

One point in the scheme’s favour is that the performance targets for the bonuses to be triggered are regarded as stretching, something that was not the case with the previous proposals thrown out by shareholders. Profits will have to double to £750 million over the next five years, which would see a huge increase in the FTSE 100 company’s value. There’s also a big deferred element to the free shares award, with 75 per cent held back until 2021. But the total lack of transparency surrounding Ashley’s entitlement has infuriated institutional investors in the group.

Most employees believe the boss gets paid way too much, particularly in the retail sector, which is not known for its generosity to store staff. But the 3,000 Sports Direct employees whose bonuses are now on the line must be hoping the scheme will be approved .

There is, however, a far larger group of Sports Direct employees who probably don’t care what happens. These are the 20,000 or so employed on controversial “zero hours” contracts, which offer no guarantee of work from week to week or even day to day. These contracts make them ineligible for the bonus.

Surprise share sale

This is Sports Direct’s third attempt in two years to push through bonuses for Ashley. The group has not taken kindly to the refusal of its investors to back the plans – and neither has Ashley. When the last attempt was foiled in April, Ashley retaliated days later with the surprise sale of shares worth £200 million, a move which sent shares tumbling.

Shareholders are due to decide on the proposals on July 2nd, although Ashley and the other executive directors will not take part in the vote. Fiona Walsh is business editor of

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