The executive team attempting to turnaround the troubled sports products retailer JJB Sports are to be awarded with shares in the firm if targets are met, it was revealed today.
Chairman Mike McTighe, CEO Keith Jones, Executive Director Dave Williams and non-executive director David Adams will benefit from the retailer’s new equity incentive plan if the company’s market capitalistion surpasses at least £96.5 million, though it is designed to encourage the board members to achieve £193 million.
Rewarded shares worth on aggregate 20 per cent of the growth in value of the company in excess of a market capitalisation of the lower target, and the new scheme will replace all earlier long-term incentive plans with Jones relinquishing his entitlements from the 2009 option scheme.
Non-exec director Richard Bernstein, who will not benefit from the new scheme, commented: “JJB is implementing its turnaround programme.
“As both a non-executive director and shareholder representative, I believe that it is now appropriate to align shareholders’ interests with those entrusted to deliver on the turnaround.”
JJB has been trying to revive its fortunes since the beginning of the year when a second company voluntary arrangement (CVA) in as many years saved the business from administration, and in May it revealed yearly losses of £181 million.
In order to pass the CVA a large portion of the retailer’s property portfolio needed to be sold off and landlords, who have seen rental payments from the firm cut, had to be convinced that the management had a strategy to return the business to profit.
As part of the new incentive scheme participants’ gains will be capped so that they cannot receive more than 15 per cent of the company’s current issued ordinary share capital.
Bernstein added: “For these targets to be met, a very substantial share price increase will be required. That is the opportunity that I look forward to seeing realised.”