Sports Direct has succeeded in pushing through a controversial multimillion-pound bonus scheme for its founder, Mike Ashley, despite fierce opposition from shareholder lobby groups.
More than 60% of votes cast were in favour of the scheme, which will hand 3,000 permanent staff 25m free shares – worth around £180m – if the firm doubles its profits by 2019.
The vote was Sports Direct's fourth attempt to push through a big payout for the billionaire Ashley. On previous occasions the company has been defeated or forced to withdraw its plans. The new proposal came just weeks after shareholders threw out a proposed £70m payout for Ashley. Shareholders have not been told how much of the new £180m pot he will get.
Technically Ashley could be assigned all the shares, but a spokesman said this would be against the ethos of the company bonus scheme, which has previously allotted the vast majority of bonus shares outside the boardroom. The shareholder vote did not include Ashley, who owns 58% of Sports Direct, because of the conflict of interest.
Just three independent investors turned up at Wednesday's special shareholder meeting at Sports Direct's Shirebrook headquarters, near Mansfield. There were no questions from the floor or challenges to the board at the meeting, which lasted barely five minutes.
Sitting at the directors' table, Ashley refused to speak to or even look at reporters attending the meeting. He cupped his chin in his hand and stared into the distance as chairman Keith Hellawell and other colleagues tried to fend off questions.
Ashley left by helicopter immediately after the meeting, taking off from the helipad in the carpark adjoining the warehouse and office complex.
The company said shareholders had backed the latest scheme over three previous alternatives after it toughened performance targets, extended the period over which performance would be measured from two to four years and wrapped Ashley's incentives into a wider scheme for permanent staff.
Hellawell, a former chief constable of West Yorkshire, said: "The board and remuneration committee responded to the feedback received from shareholders and today's vote in favour of the resolution will ensure that the group continues to retain and motivate hard-working employees.
"The resolution also recognises the substantial contribution made by Mike Ashley over many years and, as demonstrated by the previous schemes, has the potential to create a further significant increase in shareholder value."
Asked if the company felt it had consulted investors sufficiently, Dave Forsey, the chief executive, said: "Ask the investors."
However, the Institute of Directors (IoD) – which had taken the unusual step before the meeting of publicly criticising the proposed payout – said Sports Direct should not ignore the voices of the 40% of investors who did not approve the bonus scheme. Oliver Parry, corporate governance adviser at the IoD, said: "Today's vote is not a ringing endorsement for the governance set-up at Sports Direct. We are not convinced that the board is independently minded enough to exercise sufficient checks on the majority shareholder, in this case Mike Ashley." On Tuesday the IoD had warned there was no "check on Mike Ashley's power" at Sports Direct.
Robert Hingley, of the Investment Management Association, said shareholders had not been properly consulted about the latest bonus scheme and it was clear there was a "considerable body of concern" about it.
He called on Sports Direct to discuss how the potential bonus shares would now be allotted. "The middle ground would be to talk to shareholders and agree an appropriate amount," he said. "If you are a premium listed company you get all sorts of benefits including access to the capital markets, but there is a corresponding obligation that you should adhere to, including the highest standards of governance. We are not convinced Sports Direct buys into that."
Jonathan Pritchard, an analyst at Oriel Securities, said Sports Direct's shares were "only for the brave". He said that the squabble with shareholders and a dispute with major supplier Adidas over supply of key products made the prospects of an increase in the shareprice unlikely.
This week Sports Direct's chief executive, Dave Forsey, ratcheted up the battle with Adidas as he accused the German sports brand of being "anti-competitive.". Forsey has said that Adidas is preventing Sports Direct from pursuing a bid for footwear retailer Office because of indications the brand will withdraw supplies of key products. The brand has withdrawn some football and fashion-led products from the Sports Direct and USC chains owned by the retailer.
Forsey said on Wednesday: "It's incredible that Sports Direct doesn't have access to Adidas, being the largest football retailer in the world, to products that players are wearing on the field."
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