Mike ashley giving huge bonus to sports direct staff!

OP's FT article link below:

Sports Direct staff in line for £87.5m bonus
By Claer Barrett, Retail correspondent

Staff at Sports Direct, the sports retail group founded by Newcastle United owner Mike Ashley, are in line for a record-breaking £87.5m incentive scheme pay-out to be confirmed at final results on Thursday.

Believed to be the largest pay-out of its kind in the retail sector, about 2,000 full-time employees, including store staff and those based in the firm’s head office in Shirebrook, near Mansfield, stand to receive a gross payment worth £43,750 split over the next two years.

That is more than double their average take-home pay of £20,000, and the majority of staff say they plan to use the windfall to get on the property ladder or pay down mortgage debt.

Introduced in 2009, the group’s bonus share scheme is triggered only if challenging earnings targets are met. On Thursday, the group is expected to announce earnings before interest, tax, depreciation and amortisation (ebitda) exceeding the scheme’s target of £205m. If this is hit, employees stand to receive 75 per cent of their base salaries in shares issued at £1.25p in the summer of 2013.

Having rallied strongly in the past year, Sports Direct’s shares are trading at 108 per cent above that strike price at 261p.

A year ago, the company reported ebitda of £171m, which exceeded that year’s bonus target of £165m. In the summer of 2012, employees stand to receive 25 per cent of their base salaries in shares issued at £1. The company has told the Financial Times it expects the combined value of both pay-outs, based on the average wage and today’s share price, to be worth £43,750 for each staff member in the scheme. In total over 34 million shares stand to be awarded.
"“We are looking to reward our colleagues as they truly deserve”"

- Dave Forsey, chief executive

“We introduced the bonus scheme with the aim of ensuring that the whole group was aligned to try and meet the ambitious targets for the continued growth of the business,” said Dave Forsey, chief executive. “We are looking to reward our colleagues as they truly deserve – we couldn’t have achieved the growth over the past two years without them. There is no doubt that this unique scheme has improved staff retention, and we look forward to unveiling the next phase of our bonus scheme at results on Thursday.”

Mr Forsey added that staff had told him the pay-outs would be “transformational”, and a significant number were already planning to use the money as a deposit for a property. In Shirebrook, average property prices are £115,500 for detached houses and £69,000 for semi-detached houses, according to Findaproperty.com.

Although it awards shares, not cash, the Sports Direct pay-out stands to break retail records. In March, John Lewis announced its 76,000 partners would be rewarded with 18 per cent of their annual salary, equivalent to about £2,500 each. Last year, 127,000 staff at supermarket J Sainsbury shared a bonus pool of £80m when earnings targets were met, equivalent to £630 each.

“Sports Direct’s unrelenting approach is well known, and its bonus share scheme is a simple but very powerful manifestation of that, in order to drive future profitability,” said Peter Smedley, retail analyst at Charles Stanley Securities.

“The bonus share scheme has also contained some stretching debt reduction targets which have restricted the company from buying growth through acquisition.”

Last week, Sports Direct acquired an 80 per cent stake in Sir Tom Hunter’s designer fashion stores USC and Cruise. They will not sell products through Sports Direct’s 470 UK stores or website, but will be run separately in a “premium and luxury lifestyle” division. Sports Direct will invest up to £20m to develop both businesses and open new stores.

On Thursday, analysts expect Sports Direct to report pre-tax profits of £155m on revenues of £1.6bn.

 

Don't think I've forgotten about this NWPJ .. I'm no scrounger, but when it's offered ...

 

Rep'd

I hadnt seen your post earlier, so good thing you bumped it! Much appreciated.

 

Most welcome .. and ta very much ..