The Institute of Directors (IoD) has warned Sports Direct not to ignore the “substantial minority” of its shareholders who opposed a “controversial” scheme to award Mike Ashley and others a bonus of £200m, which was approved this morning.
The IoD said despite consent being granted for the scheme, which sees Ashley and an undisclosed number of Sports Direct employees awarded 25m shares worth £200m, it still has concerns about the culture of corporate governance at the retailer.
The bonus was approved today with 60.4% of shareholders in favour and 39.4% against, despite vocal criticism from major Sports Direct shareholders including the Association of British Insurers (ABI) and the Local Authority Pension Fund Forum (LAPFF).
IoD corporate governance adviser Oliver Parry said: “Today’s vote is not a ringing endorsement for the governance set-up at Sports Direct. We are not convinced that the board is independently-minded enough to exercise sufficient checks on the majority shareholder, in this case Mike Ashley. The board needs to demonstrate to minority shareholders that it is also considering their interests.
“Mike Ashley deserves acclaim for building Sports Direct into a hugely successful brand, and could equally have been rewarded through a special dividend payment which would have benefited all of the companies’ shareholders, rather than this controversial bonus scheme.”