Sports Direct has called a shareholders’ general meeting next month to approve an £11m payment to controversial founder Mike Ashley’s brother, John.
Mike Ashley will voluntarily abstain from the vote on whether Sports Direct should “reimburse” cash to his brother.
The vote comes after “a report found that John Ashley had foregone substantial remuneration from the company”.
After concern was expressed by shareholder groups, Sports Direct’s legal advisors RPC were asked earlier this year to review John Ashley’s history with the retailer since it floated in 2007.
Sports Direct said: “The purpose of this review was to investigate and report on the total amounts paid in money and in kind to John Ashley, which had been called into question given his position as brother of Mike Ashley.
“The subsequent report by RPC was produced in conjunction with independent accountants Smith & Williamson LLP (who in recent years have no connection to Sports Direct, nor with the Ashley family).
“The report concluded that if John Ashley had been treated equally with other senior executives who helped to build the company, he would, in fact, have received additional remuneration payments totalling c£11m, which he was denied because of concerns at the time about public relations.”
Mike Ashley’s comment
Mike Ashley said: “I intend to voluntarily abstain from the vote on whether or not John should receive the money that he would otherwise have earned at Sports Direct if he were not my brother.
“I fully expect that independent shareholders will vote against this proposal due to the passage of time involved, although in my opinion, technically the money is owed and therefore should be paid.
“It’s important for me to say that if John had owed one pound to Sports Direct, I would have ensured any sum was repaid in full. I hope shareholders will therefore be reassured that everything is in order and that any concerns are laid to rest.
“I always put the interests of Sports Direct ahead of my own. An example of this was the loan facility for £250m that I previously made available to the company.
“No arrangement fees or commitment fees were ever charged on this facility, which was capped at an interest rate of 0.5%. This was at least 50% below the prevailing rate that Sports Direct was paying at the time, and the facility saved the company in excess of £1m.
“I want you to know that I will continue to put Sports Direct first as we move forward together.”
The general meeting will separately seek authority to extend the minimum guaranteed value per ordinary share, applicable to those participating in Sports Direct’s employee share schemes, to global head of operations Karen Byers and global head of commercial Sean Nevitt.
They are the only remaining participants in the executive bonus share scheme.
Sports Direct said the change would, if approved, guarantee a £3 per share minimum value if their share awards are exercised before September 2018, and £4 per share if they elect to exercise their awards after September 2018, which it said was “consistent with the terms applicable to other employees”.