UK retailer will increase number of free shares awarded to Ashley if profit targets are hit in each of next three years
The Sports Direct founder and major shareholder, Mike Ashley, is in line for more than £23m worth of free shares if the retailer hits its profit targets in coming years.
Britain's biggest sports goods retailer has increased the number of shares being awarded to Ashley, who also owns Newcastle United football club, to 8m from 6m. The shares will vest in 2018 if the company meets "very stretching" profit targets in each of the next three years and a net debt to earnings ratio of 1.5 times or less by 2015. The shares are worth £23.4m at the current price of 293p.
Sports Direct is confident it will achieve the "super-stretch" target of profits excluding financial charges of £225m this year. The "super-stretch executive bonus share scheme" for Ashley is likely to be approved at its annual meeting in September, as he owns just under 70% of the equity. Ashley, who as deputy executive chairman is closely involved in the running of the retailer, has not drawn a salary since the company was floated in 2007.
The retailer, which owns the Sports World and Lillywhite stores as well as the Slazenger, Lonsdale and Dunlop brands, is gearing up for a bumper summer, thanks to the Queen's diamond jubilee, the Euro 2012 football tournament in Poland and Ukraine and the London Olympics. Total sales climbed 13.2% to £267.6m in the nine weeks to 25 March, taking gross profits up 13.5% to £99.8m. Retail sales were up 16.1% to £232.6m, boosted by online sales.
"The group has continued to deliver strong growth during February and March, outperforming management's expectations," said the chief executive, Dave Forsey.
Analysts were equally positive. Philip Dorgan, of Panmure Gordon, said: "Another excellent set of sales numbers from Sports Direct, driven by strong, if unspecified, online sales growth. Online has the potential to grow to over 20% penetration by 2015 and we think that Sports Direct will be one of the winners in an increasingly competitive online world."
Freddie George, of Seymour Pierce, echoed those comments. "The company [Sports Direct] has a major opportunity to develop internet sales. It is in the process of developing a sport and sports equipment platform of choice showcasing all key local and international brands and sports categories, including fishing and cycling, some of which will be relatively new extensions for the group." Read More
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