The surge in earnings has thrashed analysts’ expectations, lifting Sports Direct’s share price by 6p to £2.91 in early morning trading. Could Ashley have wished for a more opportune time to suggest that a little pay-back is in order?
Ashley is to be granted a ‘super stretch’ bonus scheme, which would settle eight million shares on him in 2018, if he meets certain performance criteria. This offer has been revised up from the deal of six million shares, presumably off the back of the better-than-expected results, and the ‘Olympic-sized’ opportunities presented by this year’s sporting events. For Ashley to get his bonus, though, Sports Direct will need to make underlying profits of £270m in 2013, £290m in 2014 and £340m in 2015.
The deal is by no means done: it is subject to a shareholder vote at the company AGM on later this year. But MT reckons Ashley’s in with a pretty decent chance – even though he’s not allowed to vote (his 71% shareholding would seal the deal on its own). After all, Ashley does his bit at the firm. Let’s start with the free advertising he gives Sports Direct through his other business, Newcastle United. And there’s the fact that, unlike its high street rivals, Sports Direct has posted consistent growth since its 2009 blip. The value of Sports Direct has increased 42% this year alone to £1.7bn, not bad going considering the state of other high street players. As far as the performance-related bonus argument goes, Ashley has indeed performed.
But MT reckons at least one person will be gnashing his teeth at the size of Ashley’s potential pay-out, when his own has been whittled down by half: Barclays boss Bob Diamond. Still, that’s life in the performance-related private sector, Bob…