IoD warns there is no ‘effective check on Ashley’s power’ at Sports Direct

IOD's picture
Printer-friendly versionPrinter-friendly versionPDF versionPDF version

1 July 2014

The Institute of Directors has today expressed significant concerns about Sports Direct, the FTSE 100 company in which the founder, Mike Ashley, holds a 58 per cent stake and also serves as Deputy Executive Chairman. Sports Direct is seeking to push through excessively generous pay arrangements for Mr Ashley. The IoD is concerned that this is suggestive of weak underlying governance at the company.

At the shareholder meeting taking place on 2 July, the board is expected to seek shareholder approval for the potential award of shares worth £200m to Mr Ashley and an undisclosed number of employees.

This is the third attempt in two years by the company to pay its founder, who also owns Newcastle United football club, an excessively high share-based bonus. Previous proposals have been rejected by shareholders.

Commenting ahead of tomorrow’s vote, Dr Roger Barker, Director of Corporate Governance at the Institute of Directors said:

“The fact that the board of Sports Direct is attempting once again to push through a hugely generous pay award for Mike Ashley – in the face of shareholder opposition – suggests weak governance at the company.

“This type of pay package would be unthinkable for a senior executive who was not also the company’s major shareholder. It raises doubts about whether the board is acting as an effective independent check on Ashley’s power.

“The IoD believes that, in a public company involving other people’s money, an independently minded board is essential in order to balance the interests of controlling shareholders, minority shareholders and other stakeholders.”

Mike Ashley is a hugely successful entrepreneur, but his interests as a senior executive are already fully aligned with the interests of shareholders due to his substantial equity stake. His pay as a senior executive should not be influenced by the fact that he is also a controlling shareholder.

The UK Corporate Governance Code requires that levels of remuneration should be sufficient to motivate directors of the quality required to successfully run the company, but a company should avoid paying more than is necessary for this purpose. Even though it is conditional on achieving performance targets, Mike Ashley’s proposed pay package appears to go well beyond this.

ENDS

Contacts for further comments or to arrange interviews:

Christian May
Head of Media Relations

Institute of Directors, 116 Pall Mall, London SW1Y 5ED

020 7451 3263

07908 358 728
Christian.May@iod.com

Edwin Morgan
Deputy Head of Media Relations

Institute of Directors, 116 Pall Mall, London SW1Y 5ED

020 7451 3392

07814 386 243
Edwin.Morgan@iod.com

Notes to editors

  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 34,500 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media. Follow us on  to get the IoD’s reaction on business and public policy issues.
  • The IoD offers a wide range of business services which include business centre facilities, with 15 UK centres (including three in London, Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes.
News Source : IoD warns there is no ‘effective check on Ashley’s power’ at Sports Direct
Copy this html code to your website/blog to embed this press release.