One subject guaranteed to anger investors is excessive executive pay. This anger turns to rage when taxpayers see seven-figure packages awarded to senior executives at Britain's bailed-out banks, such as Royal Bank of Scotland (LSE: RBS) and Lloyds Banking Group(LSE: LLOY).

Battling against big bonuses

However, fed-up investors are now exercising their rights as shareholders to vote against excessive executive remuneration. Since the US introduced new 'say on pay' legislation, US institutions have been much more active in having their voice heard. Recently, this led to the majority of investors in Citigroup (NYSE: C.US) voting down the US$15 million pay package of Vikram Pandit, the bank's CEO since 2007.

In Britain, institutional investors have made their disapproval known over the huge package of pay, shares, options and cash awarded to the American chief executive of Barclays (LSE: BARC), Bob Diamond. 'Diamond Bob' is in line for total rewards of £25 million this year, with investors threatening to shoot down this package at this week's annual general meeting (AGM).

A good sport

Frankly, corporate greed and director avarice are so widespread these days that it's almost impossible to find a bonus scheme that is designed to be fair on shareholders, rather than to enrich executives.

However, there is one FTSE 250 company which has an extraordinarily generous bonus scheme that is incredibly tough on its chief executive. This mid-cap marvel is Sports Direct International (LSE: SPD), and its founder and executive deputy chairman is Mike Ashley, the billionaire owner of Newcastle United FC.

This morning, Sports Direct issued a trading update in advance of its year-end on 29 April. This revealed total sales for the nine weeks ending 25 March rose by more than 13%. Over the same period, gross profit rose by 14%.

Sports Direct's core retail division did even better, producing a 16% uplift in sales and a 15% increase in gross profit.

Given the ongoing weakness of Britain's battered high streets, these results really do 'shoot out the lights'.

One brilliant bonus scheme

Today, the board of Sports Direct confirmed that the group is now certain of hitting its full-year 'super-stretch' target of underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of £225 million.

As a result of hitting this super-stretch target, Sports Direct will seek investors' approval at its 2012 AGM to offer a "Super-Stretch Executive Bonus Share Scheme" to Mike Ashley. This resolution will grant Ashley eight million shares, to vest in 2018, subject to meeting these two performance criteria:

1. The group meets "very stretching" EBITDA targets in all of the next three years; and

2. Its ratio of net debt to EBITDA is 1.5 or less in the financial year ending 2015.

These EBITDA targets are £270 million in 2012-13, £290 million in 2013-14 and £340 million in 2014-15.

What's amazing about Ashley is that he doesn't take a penny in salary from Sports Direct. Instead, by delivering value to shareholders via rising earnings, he can earn large bonuses — but always in shares, never in cash. By doing this, Ashley perfectly links his personal remuneration to shareholder earnings, which is the ideal bonus structure.

Shares for staff

What's more, Sports Direct is more generous to its workers than it is to its founder. The group introduced an Employee Bonus Share Scheme (EBSS) in July 2009, linked to stretching targets for EBITDA and net debt.

Sports Direct met both targets in 2010 and 2011, thus triggering a payment this summer of 25% of their salaries in shares to 2,000 of the retailer's leading staff. In addition, a further 75% of salary — 12,000 shares each and 26 million in total — will be handed over in summer 2013.

Bumper bonuses

As I write, Sports Direct's value is nearly £1.7 billion. Thus, the eight million shares Mike Ashley is in line to receive this year are worth the thick end of £24 million.

That's a huge payout to one man, even more so given that is he is neither chief executive nor chairman. Even so, given that Sports Direct's share price is up nearly 50% in the past 12 months, I'm sure investors will happily vote to give Ashley this huge windfall!

The ASX is already on the move in 2012, and Goldman Sachs experts recently said they reckon S&P/ASX 200 could top 5,000 next year. Read This Before The Coming Market Rally is a must-read for investors who don't want to miss out on the party. Click here now to request your free copy, before it's too late

More reading

• How to invest like Warren Buffett
• Amazon.com's next step towards world domination
• Fortescue: Coming up short?

Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

A version of this article, written by Cliff D'Arcy, originally appeared on fool.co.uk

The post Bank bosses would hate this bonus scheme appeared first on The Motley Fool Australia.

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On decision making

1. Look for easy problems

'Degree of difficulty' carries no bonus in stock market investing. That's why I've stopped trying too hard to find my next investments.

These days, an investment opportunity must be face-slappingly obvious before I'll dig into it properly.

I felt that way in the summer of 2010 when oil company BP (LSE: BP) lodged at 300p after the Gulf of Mexico oil disaster. I couldn't miss it; the news was everywhere. So, I looked into the opportunity and bought a meaningful quantity of the shares.

2. Selective attention

Too many details can dilute focus. Now, I aim to distil investment decisions down to the facts that really count.

For example, fund manager Man Group (LSE: EMG) looks interesting at its share price below 100p based on its fat dividend payment. So, I'll focus on the cash flow that's going to pay that dividend and where it's going to come from. The directors have declared that future payments will be 100% of adusted fund management fee earnings, so an important metric is the funds-under-management figure.

3. Take your advice, not theirs

A consensus of investing opinion is rarely to investors' advantage because it's often already in the price.

When I bought BP near 300p, I had to think independently and take my own advice. At the time, many commentators thought that disaster costs might overwhelm BP and great fear surrounded the share. I focused on the company's cash flow and concluded that the company could survive. I later sold many of my BP shares at prices near 500p.

4. Better to be right than consistent

I could have been wrong about BP. I may yet be wrong about Man Group. If that proves to be the case, it's important to change my view as the facts change, and sell.

Similarly, if conditions change, it may be a good idea to change my approach to investing altogether.

5. Limit decisions to a few only

I'm aiming to make fewer investment decisions of higher quality.

Now, I trade less often and the positions tend to be larger to match the quality of the opportunity.

On understanding markets

6. Long and short cycles

Some of the 12 investors in the book try to time their investments in accordance with market cycles.

Cycles are everywhere, from company-specific product lifecycles to macro-economic cycles.

Recent events have focused many investors on these often interlocking and variable cycles. The fall of cyclical companies like Royal Bank of Scotland (LSE: RBS), Lloyds Banking Group (LSE: LLOY) and Dixons Retail (LSE: DXNS) has seen to that.

Just now, I'm betting on what I hope will be a sustained upswing from companies likePersimmon (LSE: PSN), Taylor Wimpey (LSE: TW) and N Brown Group (LSE: BWNG) each of which can be identified as operating within cyclical market trends.

7. Find a bull market

This is simple, but effective, advice. We are all heroes in a bull market so find one. Why invest against the grain?

8. Pick the right train

The simple message is to pick investment fields with long-term secular growth. It's good advice but not easy to do. It's a work in progress for me.

On portfolio management

9. Stick with your best ideas

Sometimes, holding on to a winning investment is the best course of action — so I've been holding on to my winners for much longer than I used to.

10. Double and sell some

This is a great idea. Some call it top slicing.

If we sell, say, half when an investment doubles, it frees funds for other ideas, and allows a free-carried investment to run for further gains; it's a potential all-round winning strategy and something I'm planning on doing much more of in the future.

11. Dividends as a signal

Knowing when to buy and sell can be tricky, but one of the successful investors in the book reckons that a company's dividend decision summarises the whole picture: the results for the last year, the directors' view of the future and the cash position of the business.

12. Analysts and bulletin boards to gauge sentiment

City analysts' research and recommendations, and the quantity of bulletin board posts on the internet, can be great indicators of the sentiment surrounding a share, and contra-indicators for the quality of the investment opportunity.

If the growth projections are good and investors are raving about a company's prospects, there's a good chance that the optimism is already in the price. The reverse is also true.

Foolish bottom line

So there we have 12 pragmatic and tested tips from 12 highly successful investors that I'm putting to work in my own portfolio.

The ASX is already on the move in 2012, and Goldman Sachs experts recently said they reckon S&P/ASX 200 could top 5,000 next year. Read This Before The Coming Market Rally is a must-read for investors who don't want to miss out on the party. Click here now to request your free copy, before it's too late

More reading

• How to invest like Warren Buffett
• Amazon.com's next step towards world domination
• Fortescue: Coming up short?

Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

A version of this article, written by Kevin Godbold, originally appeared on fool.co.uk

The post 12 insights for my path to a million appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Morgans says these ASX shares could rise 30% to 70%
• Where to invest $20,000 in ASX ETFs right now
• CSL's collapse deepens. Why this ASX giant can't find a floor
• Top brokers name 3 ASX shares to buy today