Sports Direct shareholders should vote against the re-election of the company’s chairman, Keith Hellawell, and founder, Mike Ashley, over the retailer’s treatment of employees and poor governance, a leading advisory group has recommended.
In a note to clients, Pensions and Investment Research Consultants (Pirc) said under Hellawell’s leadership Sports Direct’s board had “consistently failed to address the employment practices issues raised by some shareholders and trade unions that have also been criticised by a parliamentary select committee report”.
Sports Direct will hold its annual general meeting on 7 September at its headquarters at Shirebrook in Derbyshire. The complex also includes the giant warehouse where the Guardian exposed treatment of employees that MPs on the business, innovation and skills committee compared to conditions at a Victorian workhouse.
Leading shareholders are considering voting against board members in an attempt to force change after long-running concerns about how the company is run. Under rules introduced last year, companies with a dominant shareholder such as Ashley, who owns 55% of Sports Direct, need the approval of independent shareholders in a separate vote at annual meetings.
Pirc, which advises clients with assets of more than £200bn, said Hellawell had not shown leadership and that the board did not appear to function effectively.
“It is important for the shareholders to be confident about the board’s ability to represent its best interests. This is no longer the case with the existing chairman and an oppose vote is therefore recommended,” Pirc said.
If independent shareholders vote to oust Hellawell, Sports Direct can hold another vote of all shareholders between 90 and 120 days after the AGM.
Pirc advised shareholders to vote against Ashley, who is executive deputy chairman, because of concerns about his influence on the board. It also cited the judgment of MPs that Ashley should be held accountable for working practices at Sports Direct.
Shareholders should also oppose the company’s annual report because of “significant and recurrent employment and governance concerns”, Pirc said. It recommended voting for the pay report after Dave Forsey, the chief executive, waived a bonus worth up to £4m.
Pirc recommended support for the Unite union’s resolution calling for an independent review of working practices, which is opposed by Sports Direct’s board.
On Thursday, Sports Direct said it would publish a report on working practices, compiled by its law firm RPC, before the AGM and conduct a review of its board of directors before next April.
A shareholder in Sports Direct said the statement was unlikely to change the minds of unhappy investors. “They were clearly putting quite a lot of store by the announcement but I think it’s landed quite flat with shareholders.”
Sports Direct did not respond to a request for comment.
