Investors may curb Ashley pay

Sep 10 2008 by Peter McCusker, The Journal

EMBATTLED Newcastle United owner Mike Ashley will come under further pressure on a second front today when he faces angry shareholders at his sports goods company’s annual meeting.

Investors in Mr Ashley’s stock market-listed retail group Sports Direct International are being urged to vote against pay proposals for executives at its annual shareholder meeting.

The billionaire owner of Newcastle United is already suffering a backlash from club fans after last week’s departure of manager Kevin Keegan.

Fans are reportedly pledging to boycott his Sports World stores and are also said to have told Mr Ashley not to attend away games.

Now investor advisory group Pirc has condemned Sports Direct’s bonus plans in yet another blow to the group, which has had a troubled history in the City since flotation in February last year.

Pirc said the targets under its incentive pay scheme for top bosses were “not sufficiently challenging” and that departure bonuses in contracts were not appropriate.

The group also said it had serious corporate governance concerns over the senior line-up, with Mr Ashley also acting as deputy chairman with joint responsibility for strategy development.

“Pirc has concerns that there is a concentration of power in the hands of the executive deputy chairman, who controls the company and its strategic direction,” it said.

Mr Ashley, who owns 72.2% of Sports Direct shares, is expected to face shareholders at the company’s offices near Mansfield in Nottinghamshire today.

Sports Direct, which owns Lillywhites and owns brands including Lonsdale and Slazenger, has been hammered over corporate governance issues since taking the firm public.

It has been criticised for its lack of communication with the City, failing to offer regular like-for-like sales figures, which strip out the effect of new store trade.

Its financial performance has also come under fire and the group reported last July that annual pre-tax profits had more than halved to £85m from £174.5m the previous year. The group pledged on reporting the figures that it would offer comparable store sales information on an annual basis.

But founder Mr Ashley has failed to win over the City’s affections, having at one time branded unhappy investors “cry babies”.

He netted a £929m windfall on the group’s stock market flotation and has since bought back shares when the stock price fell dramatically.

Magpies latest: Back page