The share price of Sports Direct has fallen this morning after the company revealed its latest proposals for changes to its bonus scheme.
Sports Direct has put forward a proposal that would see up to 25 million shares, which are worth about £200 million at the firm's current market value, to 3,000 employees.
The two previous plans suggested by the sportswear retailer have been rejected by the shareholders of the company, with owner Mike Ashley set to get a major payout if the new proposal gets the green light to progress.
In order for the bonus scheme to be updated, Sports Direct would have to make at least £480 million at the end of the 2016 financial year, with this figure rising to £750 million for 2019. This would represent a significant period of growth for the company, as its annual underlying earnings last year were recorded at £287.9 million.
Chairman of Sports Direct Keith Hellawell described the bonus scheme operated by the firm as "one of the most wide-reaching and successful employee reward schemes in the UK".
He said: "The success of the scheme is demonstrated by the shareholder value created, with the share price reaching an all-time high in April this year and currently six times higher than when shareholders approved the 2009 Employee Bonus Share Scheme.
"The board and the remuneration committee have responded to the feedback received from shareholders to develop a long-term share incentive scheme which not only will continue to motivate the company's employees but which also recognises and rewards the substantial contribution made by Mike Ashley over many years."
Mr Hellawell also pointed out that the proposed changes to the bonus scheme have the potential to "create a further substantial increase in shareholder value".
Stocks in the sportswear retailer fell steadily over the course of the morning session on the London Stock Exchange, dropping by more than one per cent compared to the start of trading. By 11:34 BST, stocks in the firm were 1.04 per cent lower on the opening of the index today.
Find up to date information on the FTSE 100 and spread betting strategies at City Index
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.