Frasers Group PLC (LON:FRAS) has unveiled a £100mln bonus scheme for its workers ahead of an annual meeting where boss Mike Ashley’s re-election has been opposed by a major shareholder advisory group.
Pirc, which advises institutional investors about governance matters, said shareholders should vote against Ashley and chair David Daly after workers at the group’s Sports Direct chain had been asked to work while furloughed during the coronavirus lockdown.
READ: Frasers Group boss Mike Ashley ‘deeply apologetic’ over coronavirus actions
It said this was “representative of a corporate culture that does not meet best practice standards with regard to the treatment of employees”.
In a countering move, Frasers, which also runs House of Fraser and Flannels, has created a company bonus scheme that it said “could be worth in excess of £100mln”.
Independent retail analyst Nick Bubb said: “It is unclear why the hapless Frasers has not provided details of this scheme before or whether the result of the vote is in doubt, assuming most big shareholders will have already voted by proxy.”
Cash bonuses and the 'Fearless 1,000'
Open to “the vast majority of workers”, the retailer's bonus scheme is split into two sub-plans, where either cash bonuses or share awards can be received.
Under the cash plan, eligible and qualifying workers could receive bonuses of up to four weeks salary “as a reward for their loyalty and hard work”.
For the share award scheme, the Frasers share price will need to rise above £10 for 30 consecutive trading days during the next four years, though the shares closed overnight at 360.8p and have been below £4 for most of the past five years.
Within the share bonus plan, the “Fearless 1,000” scheme would be open to a thousand eligible and qualifying workers “who most demonstrate outstanding performance”.
Up to ten of these workers could “each receive share awards potentially worth around £1mln”, though this is based on award shares at £10 per share versus a current share price below £4.
Other members of this “Fearless 1,000” group would receive share awards “potentially worth between £50k and £500k”, the company said, if the plan is approved.
Chairman Daly said the scheme “strikes the right balance between rewarding as many of our people as possible, whilst also potentially paying life changing sums to those who make the most outstanding contributions”.
He said the board believes the £10 share price “is a realistic target”.
Details of the scheme show that eligible and qualifying employees can participate in the main plan if they have “maintained satisfactory performance ratings” during the performance period and will lapse if the individual’s appraisal ratings fall below this minimum standard.
It is not known if attendance in-store while on furlough would be the sort of dedication required to meet this satisfactory level of performance.