A customer walks past soccer boots and balls at a JD Sports Fashion Plc sportswear retail store on Oxford Street in London, U.K., on Thursday, April 28, 2016. With a market value of 2.37 billion pounds ($3.5 billion), JD Sports Fashion Plc has overtaken Sports Direct International Plc, controlled by billionaire Mike Ashley. Photographer: Luke MacGregor/Bloomberg
JD Sports’ 10-year long-term incentive plan adopted in 2014 pays out sporadically and in cash rather than shares © Bloomberg

JD Sports faces the prospect of an investor rebellion at its annual meeting on Wednesday as it seeks shareholder approval for a £6m cash bonus for Peter Cowgill, its executive chairman.

The proposed payment, to be made in four instalments, is intended to reflect the company’s strong recent performance. Its share price has risen by more than 70 per cent so far this year. The group, promoted to the FTSE 100 index at the last review, is now worth almost four times as much as rival Sports Direct.

But the major proxy voting agencies have recommended that investors vote against the payout. ISS said it represented a “significant departure from best practice” and highlighted “a distinct lack of commentary” within the remuneration report as to what has triggered the retrospective special award instead of more regular long-term incentive plans.

It also recommended voting against the reappointment of both Mr Cowgill, widely admired as the architect of JD Sports’ success, and remuneration committee chair Andrew Leslie.

Pirc also opposed the bonus and the re-election of Mr Cowgill, and criticised the company’s long-term incentive plan. It said the LTIP was measured over too short a period, paid out in cash not shares, and was not linked to non-financial performance indicators — all of which fell short of best practice.

Glass Lewis said special bonuses of this kind should not be used “to address deficiencies in other parts of the package” and that it “undermines the purpose of the regular remuneration framework”.

One institutional shareholder, not among the top 20, said it had voted against both the special bonus payment and general remuneration arrangements. It added that it had “strong reservations” over the relative lack of independent leadership on the board and the dominance of Mr Cowgill. He has run JD Sports without a chief executive since the departure of Barry Bown in 2014.

Last year, around 15 per cent of investors voted against the retailer’s remuneration report. According to analysis by Proxy Insight, they included BlackRock, M&G, Legal & General, Axa and Aviva.

JPMorgan voted to accept the report, as did Aberdeen Standard and Fidelity, two of the largest independent shareholders — although both voted against in the previous year. All three declined to comment on their intentions this year.

The report and the bonus will almost certainly be approved by Pentland, the privately held group that owns brands such as Berghaus, Speedo and Ellesse. It holds a 57 per cent stake in JD Sports, but declined to comment on its voting intentions.

JD Sports also declined to comment. It has in the past stated that the heavy reliance on cash rather than share-based payments reflected the limited liquidity in the company’s shares owing to the large Pentland holding.

Get alerts on JD Sports Fashion PLC when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article