More than 2,000 shop staff at Sports Direct are set for a life-changing windfall after record profits at the fast-growing, cheap-and-cheerful chain triggered a bonus payout that will see workers who earn £20,000 a year banking payouts of £100,000 each.
While six-figure bonuses are usually reserved for executives, the U.K.’s biggest sports retailer set up its bonus scheme back in 2009 for any full-time staff, from stockroom to the boardroom, who had worked for the company for a year and stayed for a further four. Since then the retailer’s fortunes — and its share price — have been transformed and the workers have hit the jackpot.
The company’s profits have soared 40 per cent to more than £200 million in the past year, at a time when the high street has been struggling badly.
But Sports Direct, set up 30 years ago by billionaire and Newcastle United owner Mike Ashley, has gone from strength to strength with its ‘pile it high, sell it cheap’ business model. The retailer said the past year was boosted by the 2012 summer of sport — the Olympics, Paralympics and UEFA Cup competition. It was Mr. Ashley who devised the scheme to pay out the vast staff bonuses.
Four years ago, all full-time staff who had been with the company since 2008 were promised free shares if profit targets were hit in 2009. When that target was hit they were handed a 25 per cent bonus on their base salary, paid in shares worth £1 each. Those shares soared in value, and when a first 25 per cent tranche of free shares were awarded last year, someone earning £20,000 a year almost doubled their take-home pay with shares worth £17,500.
While impressive, that payout was a mere pittance compared with the huge windfall that follows Thursday’s results. The same staff member earning £20,000 will now get 12,000 shares worth a further £75,000.
The lucky 2,000 are now free to sell the shares — and Sports Direct has even provided a free stockbroking service to help them cash in.
Mr. Ashley himself does not qualify for a payout — but he did sell shares worth £100 million earlier this year, to add to the £ one billion he received when he floated the business on the stock exchange in 2007.
— © Guardian Newspapers Limited, 2013
