Mike Ashley's Sports Direct will announce plans to scrap dividend payments to shareholders when it announces its full-year results this month.

City analysts say the move will save the sportswear giant £21m a year and the proceeds will be used to pay down debt.

The plan to axe the dividend will come as it has emerged that Sports Direct has revised the terms of a proposed £50m bonus scheme that could see more than 2,000 staff at the company bag a year’s salary in free shares.

The bonus plan will hand employees a share windfall worth an average of £25,000 if the company meets self-

imposed profit targets.

Under draft terms of the bonus plan that have been discussed with investors during the past few weeks, the payday bonanza would have been put into effect if Sports Direct generates more than £200m of underlying profits by the 2010-11 financial year.

It is thought the scheme will now be split over two years after consultation with investors, and staff will get 25% of their salary in shares at the end of the current financial year if they generate £160m of underlying profits, and the remaining 75% of salary the following year if they hit the £200m target.

The share payout would dilute Ashley’s 71% stake in Sports Direct. He would not be eligible for any bonus payment.

Sports Direct shares have enjoyed a strong rally — doubling in value since the start of the year to close at 82.5p last Friday. Sports Direct is expected to say that it generated underlying profits of £135m in the 2008-9 financial year.

• The Financial Services Authority has written to Chris Ronnie, former boss of the JJB sports chain, to say that it has discontinued its investigation into a controversial share sale.

Ronnie was dismissed from JJB in March, when it emerged that he no longer owned shares in JJB after Kaupthing Singer & Friedlander, the UK arm of Icelandic bank Kaupthing, took control of his stake then went into administration.

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