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Direct action came to nought, so Sports Direct can do what it likes Direct action came to nought, so Sports Direct can do what it likes
(about 9 hours later)
If you have ever wondered why those of us who cover the City are sometimes driven to despair, I give you Sports Direct.If you have ever wondered why those of us who cover the City are sometimes driven to despair, I give you Sports Direct.
You may remember earlier this week I noted that finally – and after a litany of governance failings and pay outrages that the company would struggle to list on one of its ubiquitous flash sale e-mails – it looked as if the City was preparing to send the message that the sportswear and equipment retailer should play nice.You may remember earlier this week I noted that finally – and after a litany of governance failings and pay outrages that the company would struggle to list on one of its ubiquitous flash sale e-mails – it looked as if the City was preparing to send the message that the sportswear and equipment retailer should play nice.
In addition to the unions and people like the governance watchdog Pirc – which is renowned for ploughing a lonely furrow of dissent when it comes to corporate governance failings – this time around a sizeable fund manager with real clout had broken cover to say some fairly unflattering things about the company. Royal London Asset Management also pledged to vote against the re-election of chairman Keith Hellawell and his fellow non-executive directors for the second year in a row.In addition to the unions and people like the governance watchdog Pirc – which is renowned for ploughing a lonely furrow of dissent when it comes to corporate governance failings – this time around a sizeable fund manager with real clout had broken cover to say some fairly unflattering things about the company. Royal London Asset Management also pledged to vote against the re-election of chairman Keith Hellawell and his fellow non-executive directors for the second year in a row.
It got better. Analysts working for investment banks serving as corporate brokers rarely do anything to rock the boat, chiefly because they put their employment prospects in real danger if they do.It got better. Analysts working for investment banks serving as corporate brokers rarely do anything to rock the boat, chiefly because they put their employment prospects in real danger if they do.
But after Sports Direct had the gall to issue a virtually fact-free trading update that basically said, “We’re doing fine, and we’re not going to tell you anything else until we’re good and ready, so run along and shut the door on your way out”, BESI’s Tony Shiret felt moved to issue a gentle rebuke.But after Sports Direct had the gall to issue a virtually fact-free trading update that basically said, “We’re doing fine, and we’re not going to tell you anything else until we’re good and ready, so run along and shut the door on your way out”, BESI’s Tony Shiret felt moved to issue a gentle rebuke.
“Overall we expect that investors may react adversely to the lack of detail here,” he opined in a note published on the morning of the annual meeting. For which read: “Really guys? You know they’re going to be seriously annoyed about this, don’t you? Couldn’t you have thrown them a banana or two to keep the peace?”“Overall we expect that investors may react adversely to the lack of detail here,” he opined in a note published on the morning of the annual meeting. For which read: “Really guys? You know they’re going to be seriously annoyed about this, don’t you? Couldn’t you have thrown them a banana or two to keep the peace?”
Sports Direct, which had banned the media from its AGM, and by so doing put itself in the company of dodgy little mining companies with nasty histories, was unmoved. Its message can by summed up thusly: “Get knotted. We’re in charge here, and if you don’t like it, there’s the door.”Sports Direct, which had banned the media from its AGM, and by so doing put itself in the company of dodgy little mining companies with nasty histories, was unmoved. Its message can by summed up thusly: “Get knotted. We’re in charge here, and if you don’t like it, there’s the door.”
In response, the majority of its investors duly assumed the position and said: “Yes sir, please may I have another”. RLAM, Legal & General and one or two others did vote against Mr Hellawell’s re-election and those of some of the others, as promised. But when the final results were published it emerged that they needn’t have worried too much. Less than a quarter of the group’s independent shareholders (in other words those not connected to founder and controlling shareholder Mike Ashley) voted against Mr Hellawell, who prompted the biggest protest. Even after abstentions he still had the backing of more than 70 per cent of them. The advisory vote on the remuneration report attracted rather more dissent, but the key word there is “advisory”.In response, the majority of its investors duly assumed the position and said: “Yes sir, please may I have another”. RLAM, Legal & General and one or two others did vote against Mr Hellawell’s re-election and those of some of the others, as promised. But when the final results were published it emerged that they needn’t have worried too much. Less than a quarter of the group’s independent shareholders (in other words those not connected to founder and controlling shareholder Mike Ashley) voted against Mr Hellawell, who prompted the biggest protest. Even after abstentions he still had the backing of more than 70 per cent of them. The advisory vote on the remuneration report attracted rather more dissent, but the key word there is “advisory”.
For what it’s worth, here’s some advisory comment: Sports Direct will continue thumbing its nose at its investors as a result of this, because the company, its board and, especially, Mr Ashley now know that they can. What should be deeply disturbing to anyone with investments or pension funds linked to the London Stock Exchange is that the message will have been heard and taken note of across corporate Britain.For what it’s worth, here’s some advisory comment: Sports Direct will continue thumbing its nose at its investors as a result of this, because the company, its board and, especially, Mr Ashley now know that they can. What should be deeply disturbing to anyone with investments or pension funds linked to the London Stock Exchange is that the message will have been heard and taken note of across corporate Britain.
 
Post-Hodge PAC looks kinder, gentler, but less effective
Another depressing dish served up by those who are supposed to hold companies and public bodies to account came courtesy of the new House of Commons Public Accounts Committee.
Previously, appearances by HM Revenue & Customs before it took the form of American football matches, with chairwoman Margaret Hodge taking the role of Ndamukong Suh, the fearsome defensive tackle who will this year be flattening opposing quarterbacks for the London-bound Miami Dolphins.
Ms Hodge’s replacement, Meg Hillier, had signalled a change of tack, after beating out the rather more formidable Gisela Stuart to the role. The first appearance of HMRC boss Lin Homer before the committee provided a demonstration of the new approach. Future hearings, it seems, will be more akin to village cricket matches.
Tory Stephen Phillips, it’s true, bowled a few bouncers, and bouncers are really what was required. The service provided by HMRC, despite the best efforts of Ms Hodge, is actually deteriorating in some respects. Less than 40 per cent of calls to the agency get answered within five minutes, for example. A large minority don’t get answered at all.
Ms Homer played a forward defensive when confronted with this, saying eight out of 10 “customers” found her organisation “reasonably easy” to deal with.
Meanwhile a few million more has been added to the pile, courtesy of tax cheats on the “Lagarde list” that emerged from HSBC’s hugely controversial Swiss unit, but there’s still been just one successful prosecution. That was what raised the ire of Mr Philips, and no wonder.
The methods of Ms Hodge frequently attracted criticism. She was accused of “bullying” and being “abusive”, words which have also been used about Mr Suh.
But her tactics were nonetheless very effective in forcing issues such as HMRC’s poor performance, not to mention the abusive practices employed by multinational companies to avoid paying corporation tax, on to the agenda.
It appears that that has come to an end, which was perhaps why Ms Hillier was elevated to the role as opposed to the feisty Ms Stuart, who might just have done a better job at representing the public interest.