JD Sports plans to pay its executive chairman Peter Cowgill a special bonus of £6m in cash to reflect his “exceptional performance” in the role.
The company’s remuneration committee said the payment was justified because Mr Cowgill did not receive any long-term award under its existing long-term incentive plans in the past two financial years, “and it is not intended that he will receive any awards under the executive LTIP for the forthcoming financial year or in the future”.
Mr Cowgill, who has run JD Sports without a chief executive since 2014, has also not received pension contribution payments since 2013. “The payment is, therefore, being recommended in part to compensate the executive chairman for this and in part to recognise the exceptional performance.”
Shares in JD Sports have risen by more than 6,000 per cent since Mr Cowgill’s appointment as executive chairman in March 2004. Over the past year they are up more than 60 per cent and the company will almost certainly join the FTSE 100 index at the next reshuffle.
But despite this stellar performance, the company’s 10-year, long-term incentive plan adopted in 2014 pays out only sporadically and in cash rather than shares.
JD Sports said it would seek shareholder approval for the payout at its annual meeting.
There has, however, been investor disquiet in the past about its remuneration arrangements. Last year, 15 per cent of shareholders voted against the company’s remuneration report after advisers Pirc raised concerns.
Pirc said at the time that overall disclosure was “not acceptable”, and on Thursday it said it would issue an opinion on this year’s report closer to the annual meeting on July 3.
Deborah Rees-Frost, chief executive of Personal Group, said the bonus “looked like a kind of levelling up arrangement”.
“They almost seem to be saying that the LTIP is not going to pay out . . . I would think they will look again at the design of it next year,” she added.
Another remuneration adviser said that while payments in cash were not necessarily a bad thing, retrospective payments went against the idea that executive remuneration should incentivise future performance. “There are a lot of red flags here and I’ve no doubt the proxy voting agencies will have a heart attack over it,” he said.
In 2017, more than a fifth of shareholders rebelled, while in 2014 there was pushback against a “special retention fee” paid to Mr Cowgill after Barry Bown, the former chief executive, left the company. Mr Bown subsequently became the boss of Footasylum, which was acquired by JD Sports earlier this year.
Any investor criticism will be likely blunted not only by the share price performance but by the fact that Pentland, which owns 57 per cent of JD Sports, is supportive of Mr Cowgill. Andrew Leslie, the chair of the remuneration committee, is a former Pentland director while its chairman Andy Rubin is also on the JD Sports board, though he does not sit on the remuneration committee.
The bonus, if approved, will be paid in four instalments of £1.5m, with the final payment due in February 2021. It is subject to income tax and national insurance — meaning that around three-fifths will go to the Treasury rather than Mr Cowgill. It will also have clawback provisions.
Both JD Sports and Mr Cowgill declined to comment further.
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