Mike Ashley bows out from Sports Direct's 2015 bonus scheme

Mike Ashley, founder of Sports Direct, has pulled out from participation in the company's 2015 bonus share scheme despite it being back by independent shareholders two weeks ago. Earlier this month Sports Direct shareholders voted for the bonus share scheme which would award 200

million pounds worth of shares to 3,000 employees on a full-time contract, including Ashley, depending on the company's performance and if earning doubled by 2019. The latest bonus scheme was the company's fourth attempt to reward its founder, who receives no salary or bonus from Sports Direct, despite owning 57.7 percent.

Founder of Sports Directs withdraws from company bonus share scheme

On July 2, 60.4 percent of shareholders backed the scheme and voted it through. However, other leading investors who had opposed the bonus scheme were apparently causing issues within the company by planning to vote against the reelection of non-executive chairman Keith Hellawell, who has supported the plan to reward Ashley, during the company's annual general meeting in September.

On Wednesday, Hellawell noted that it was due to “recent unhelpful speculation surrounding [Ashley's] potential allocation,” that he has decided to pull out from the bonus scheme. Sports Direct announced in a press release that Ashley made his decision to withdraw from the scheme “after discussion with the remuneration committee” and “has informed the board that he does not wish to be awarded any shares under the 2015 bonus share scheme.”

Ashley added that he also informed that board that while the 2015 bonus share scheme is in place, which relates to the financial period up to April 2019, he does not expect any other share based bonus scheme to be proposed to shareholders “in relation to his role as an executive director of Sports Direct.”

Hellawell added despite Ashley's withdrawal from the bonus scheme, he remains “fully committed to achieving the scheme's stretch targets. Regarding the allocation of shares, Mike's focus is on ensuring that the scheme aligns all employees to achieve the company's objectives...he is determined to ensure that there is the maximum number of shares available for the eligible employees.”

His choice to pull out from the bonus scheme would mean that Sports Direct's 3,000 eligible employees stand to receive a bigger share of the pay out from the 25 million shares. His decision to pull out of the scheme has caught the City off guard. Retail analyst Nick Bubb commented to the Guardian: “maybe Mike realised that he would end up getting too much of the share scheme and would thus squeeze out the staff, which would be counter-productive.”

“Plenty of people thought Mike Ashley shouldn't need any more motivation, given his huge shareholding in the company, so presumably that is what will keep him going from now on...for example, a 10p dividend would generate him income of well over 30 million pounds which would keep the wolf from the door,” added Bubb.

Ashley's withdrawal from the bonus scheme comes a day before Sports Direct is due to release its financial results.