News Column

Sports Direct Proposes New Bonus Share Scheme Including Mike Ashley

June 9, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Sports Direct International PLC said Monday it is once again seeking shareholder approval for a bonus share scheme for executives, including founder and Deputy Chairman Mike Ashley, which could net them up to 25 million new shares contingent on performance targets.

Sports Direct were trading up 0.4%% at 816.50 pence, shortly after market open Monday. The new shares would represent about 4.2% of the company and be worth GBP204.1 million in total at current prices.

Ashley holds 57.71% of Sports Direct shares, after selling a 4% interest in the company for GBP204 million in April.

The company said that Ashley's invitation to participate in the scheme reflected the fact that he has received "no remuneration for his substantial contribution to the company since its initial public offering in February 2007" and the fact that he is not participating in the 2011 executive bonus share scheme.

Ashley was originally cued up for share options worth more than GBP65 million in March through a supplemental executive bonus share scheme. However, Sports Direct cancelled the general meeting to approve this bonus after it became apparent it had not secured the required level of shareholder approval.

The new share scheme will grant no-cost options over 25 million shares, upon the achievement of certain earnings before interest, tax, depreciation and amortisation targets.

The performance targets are EBITDA of GBP480 million in the financial year 2016, GBP570 million in 2017, GBP650 million in 2018 and GBP750 million in 2019. If these targets are all met, 25% of any award would vest after the company's results in 2019, and 75% after its results in 2021.

Under the previously proposed bonus scheme, options would be granted on an EBITDA of GBP330 million in the current financial year ended April 28, and GBP410 million in fiscal 2015, and a net debt to EBITDA ratio of 1.5 times or less at the end of 2015.

In the financial year 2013 the company made EBITDA, excluding exceptional costs and some other charges - including the costs of previous company share bonus schemes, of GBP287.9 million, up from GBP235.7 million in fiscal 2012.

"Based on the stretching performance targets established, this scheme has the potential to create a further substantial increase in shareholder value," said Chairman Keith Hellawell in a statement.

The executive directors who are eligible to participate, including Ashley, will not exercise their rights to vote on the resolution. The general meeting to approve the new scheme will take place July 2.

The company also said Monday entered into a new four-year multi currency revolving credit facility, including a leverage covenant that means its net debt to ebitda ratio cannot exceed 2.5 times during the term of the facility.

Sports Direct will announce its full year results July 17.

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Source: Alliance News

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