THE City last night took a hopeful view of the £14m incentive plan launched for the bosses of troubled retailer JJB Sports.
Shares in the firm, which was rescued by a deal with landlords in March, closed up 2.4 per cent despite a dire day on the rest of the FTSE, after it said senior managers could end up with 15 per cent of the firm’s equity if their turnaround plan is successful.
The incentive scheme will see chairman Mike McTighe, chief executive Keith Jones, chief financial officer Dave Williams and non-executive director David Adams, as well as several senior managers, receive 20 per cent of the growth in the value of the company above a market capitalisation of £96.5m, increasing by five per cent a year until vesting.
JJB, which counts Microsoft founder Bill Gates among its major shareholders, said the scheme will replace previous management incentive plans and has been designed to carry out its “ongoing turnaround plan successfully and share in the value that would be created”. It will encourage directors to hit a target market cap of £193m, double the level of emergency investments, triggering the award of 7.2 per cent of equity.
The awards would be capped at 15 per cent if JJB’s market capitalisation reached £490m – more than eight times its current value. Analysts were unimpressed, however, with Nick Bubb at Arden Partners, calling the scheme “fanciful”. JJB posted an annual loss of £181m in May and warned it could take five years to fix the business.