Sports Direct founder withdraws from bonus scheme

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

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.

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.