Another fight over executive compensation has broken out at sports retailer Sports Direct. Investors are protesting against a bonus scheme that would pay out 25 million shares to the top 3,000 employees, including founder and deputy chairman Mike Ashley, who owns 58% of the shares.
This is the company’s third row over rewarding Ashley. Earlier this year, the board proposed giving him shares worth £67m if he hit certain targets in 2014 and 2015. Investors howled that down.
What the commentators said
Compared to absurdly complicated schemes seen elsewhere, said Lex in the FT, at least “this is a paragon of simplicity”. If earnings targets are hit every year until 2019, the shares are paid out; if not, they’re not.
The targets are “tough”, too, with operating earnings supposed to more than double by 2019. Still, “there are plenty of reasons to feel uncomfortable”.
You can say that again, said Nils Pratley in The Guardian. At least Sports Direct has tacitly conceded that if Ashley wants to earn a bonus he should join a company-wide scheme rather than have a tailor-made arrangement. But otherwise the board’s approach is “as cack-handed as before”.
The bigger question is why Ashley needs a big payout at all, said James Moore in The Independent. He has been “handsomely rewarded” by the stock’s surge since flotation in 2007. He earned £900m at the flotation and made £200m this year by selling a large chunk of shares. Is it really necessary to hand some back to him for free?