Mike Ashley’s Sports Direct on Thursday flew in the face of corporate governance again, as it set aside a £5 million cheque for his future son-in-law despite a plunge in profits.
Michael Murray, who is engaged to Ashley’s daughter Anna, was brought in to look after the retailer’s sprawling property portfolio in 2016.
Today he was promised the cash if the deals that he strikes are lucrative and handed the title of “head of elevation”.
Murray is not directly employed by the company and still works as a consultant.
He waived a chunk of its fees, from 25% to 20% of the total value drawn from buying and selling stores and negotiating rents.
However, Sports Direct’s three non-executive directors will have the final say on whether MM Prop Consultancy gets the £5 million, paid out on September 30 at the earliest.
The move is likely to attract criticism from shareholders and corporate governance advisory groups.
It is not the first time he has stirred controversy by keeping it in the family. He ran into hot water for failing to disclose that he was using his brother John’s distribution company for Sports Direct business. In November, he tried to push through a deal to pay John Ashley an extra £11 million, saying he had been underpaid. The proposal was voted down by investors.
Shares tumbled 46.1p, to 390p today as the trainers-to-footballs retailer said pre-tax profits fell 72.5%, from £281.6 million in 2017 to £77.5 million for the year to April 29.
That fall was due to a plunge in the share price of embattled department store chain Debenhams, in which Sports Direct has a near-30% stake.
Sports Direct, which has concessions in Debenhams, said it wants to work with it on improving its online offer and opening stores in Scandinavia.
“Add on to this news of a 2% slide in UK sales, and investors were not happy,” said Connor Campbell of Spreadex.
Revenues rose 3.5% to £3.3 billion thanks to its international arm and strong growth in its upmarket Premium Lifestyle division including the Flannels chain, which Ashley previously referred to as the Selfridges of Sport.
Finance chief Jon Kempster added that deals with the likes of Puma and Nike are luring more shoppers to its stores and website.
“We recognise that the High Street is under pressure but we’ve tried to be bold and creative and drive our own destiny,” he said.
Newcastle United owner Ashley also has an 11% stake in House of Fraser, which is shutting more than half of its stores in a bid to stay afloat.
“A big slump in annual profit suggests the business should stick to its core skills rather than engaging in speculative investments in the retail sector,” added AJ Bell’s Russ Mould.