A shareholder rebellion has sunk the £70m bonus hopes of Sports Direct boss Mike Ashley. An investor meeting scheduled for tomorrow has been cancelled after several backers including Schroders rejected the plan.
Though Ashley owns 60% of the company - the value of its shares soared almost 90% last year - the FTSE 100 company has had to beat a retreat: for the moment.
Bluff called"During our on-going discussions with institutional shareholders," says non-exec director Dave Singleton, "it became apparent that, while we had the support of some of our largest shareholders, we had not been able to secure the requisite level of shareholder approval."
He went on: "While the Board is disappointed that this resolution will not now be passed, we respect shareholders' views. We remain convinced of the benefit of aligning Mike Ashley's interests with those of all other shareholders."
Ashley needed more than 50% of the overall investor pool to back the bonus. The sports retailer boss is unlikely to be in serious need of the cash, already banking many millions in selling off some of his shares, though he has not taken a salary since floating the company in 2007.
Scale of rewardBut what has disappointed the City is the sheer scale of Ashley's proposed award. Sports Direct has a generous share schemes for its full time staff (though the company also operates a zero hours contract for some workers).
Last August around 2,000 staff bagged a collective £112m pay-out, meaning some saw their annual wages quadruple. Currently Sports Direct shares sell for 901p (at time of writing, 12pm Thursday), close to an all-time high.
Shareholder bust-ups on super-size exec pay increasingly make headlines. Barclays recently faced uproar on plans to award bonuses 10% higher than last year, despite profits slumping from £7bn to £5.2bn.
On the riseThe boss of WH Smith, Kate Swan, recently incurred the anger of investor group Pensions & Investment Research Consultants (PIRC) when it issued an edict to institutional investors slamming WH Smith's pay policies - in particular, the award of £11m of shares to Swann "without obvious benefit to shareholders".
Other big business names like Sir Martin Sorrell, chief exec of WPP, has also endured the wrath of shareholders, uneasy about the size of remuneration packages, many baring little relation to base salaries.
A recent eFinancialCareers website survey recently claimed the average bankers' bonus globally was almost 30% higher than a year ago, with the City of London leading the charge.