Scottish Daily Mail

Own goal for Sports Direct

- By RUTH SUNDERLAND Associate City Editor

MIKE Ashley, the Sports Direct tycoon, has always been a law unto himself. Some may feel that as a highly successful entreprene­ur, he has earned the right. Given that he has, in the past, described his City critics as cry-babies, that seems to be his own view.

His maverick approach, however, has provoked an extraordin­ary backlash from the City, which has asked the normally mild-mannered Associatio­n of British Insurers to try to reason with the Sports Direct board, led by Keith Hellawell, a former senior policeman.

The flashpoint is Ashley’s pay. A group of leading shareholde­rs are enraged that Sports Direct keeps coming back with proposals for bonus schemes – so far there have been four, and each has been at least as outrageous as the last.

The rationale from Sports Direct for bonus plans that could dish out up to £200m in shares between him and other staff, is that as the group’s founder and 62pc shareholde­r, Ashley needs truly exceptiona­l rewards to motivate him.

Paying chief executives ridiculous sums on the basis they are already very rich indeed is patently absurd. It should not need saying that executive rewards ought to be calibrated by their performanc­e, not their personal wealth or the size of their shareholdi­ng.

The fact Mike Ashley is an exceptiona­l retailer is not in doubt.

He has taken no salary since Sports Direct floated in 2007, some ordinary staff have benefited from life-changing bonus payments, and the shares have performed strongly, rising more than 200pc in the past three years.

Some might think shareholde­rs are being priggish to carp on about corporate governance under these circumstan­ces.

The wider point is that as a premium l i sted company, Sports Direct cannot be allowed to serve only one master, Mike Ashley, while thumbing its nose at other share- holders. New rules are coming into force later this year so that companies with a controllin­g shareholde­r will have to sign an agreement ensuring the interests of minority investors are respected.

The regulators should go further, and give the Financial Conduct Authority the power to use sanctions against those who breach their agreements.

A premium listing brings some big advantages, not least liquidity, which Ashley took advantage of recently when he sold off £200m of shares.

The deal is that if you want the benefits of a listing, you should play by the rules.

Happy splitters

WHO knows how it’s working out for Gwyneth Paltrow and Chris Martin, but Antonio Horta-Osorio and Paul Pester have taken a decent stab at conscious uncoupling.

Lloyds’ chief executive Horta Osorio has sold off a larger chunk of TSB shares at a significan­tly better price than he i nitially hoped.

Pester, the new TSB supremo, will, for his part, have been gratified to see the shares rise strongly on their first day of conditiona­l dealings.

Not so long ago, banks were pariah stocks, but thanks to a surge in demand, TSB now has more than 60,000 retail investors.

If it deals with them intelligen­tly instead of treating them as a nuisance, they could be a real asset.

The new bank could take a tip from retailers such as Marks & Spencer and build relationsh­ips with small investors to encourage them as customers, for instance with special product offers.

Looking ahead there are question marks over whether TSB has the scale to be a serious challenger bank or the capacity to grow organicall­y to that level.

But its successful debut brings its own advantages. It means there is more liquidity in the shares and, assuming JP Morgan Cazenove takes up its over-allotment, Lloyds will be left with a smaller residual holding of around 60pc – much less than the 75pc it originally expected. It clears the path for Horta-Osorio to offload the remaining stake in TSB more quickly, in two tranches instead of three.

TSB’s positive reception is also a good omen for other bank floats in the middle distance including the RBS offshoot Williams & Glyn, Santander UK and of course the first stage in the sale of the Treasury stake in Lloyds itself.

That now looks feasible by the end of the year – cheering news for the Government, which would gain a fillip from a pre-election sale.

Coupe de grace

NEW J Sainsbury boss Mike Coupe is also getting a good start with the grocer’s neat deal with Danish discounter Netto.

It looks an obvious move – now Sainsbury’s has done it – and that kind of simplicity is one of the hallmarks of a really good idea.

Poor old Phil Clarke at Tesco must be kicking himself that he didn’t think of it, instead of mucking around with hipster coffee bars like Harris + Hoole.

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