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Sports Direct's corporate governance criticised by major investor group Sports Direct's corporate governance criticised by major investor group
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An influential investor group with combined assets of £14.5tn has ratcheted up the pressure on Sports Direct by publicly criticising the embattled retailer’s corporate governance failings.An influential investor group with combined assets of £14.5tn has ratcheted up the pressure on Sports Direct by publicly criticising the embattled retailer’s corporate governance failings.
It is the first time that the Investor Forum, set up two years ago, has aired concerns about a company in public. The group has 40 members and represents 27% of Sports Direct’s independent shareholders, including Legal & General, Aviva, Standard Life and Fidelity.It is the first time that the Investor Forum, set up two years ago, has aired concerns about a company in public. The group has 40 members and represents 27% of Sports Direct’s independent shareholders, including Legal & General, Aviva, Standard Life and Fidelity.
“Governance failings are clearly resulting in declines in operating performance and long-term shareholder value,” said the Investor Forum (pdf), deploring the lack of progress. It called for a clear plan of action to begin rebuilding the confidence of shareholders and others.“Governance failings are clearly resulting in declines in operating performance and long-term shareholder value,” said the Investor Forum (pdf), deploring the lack of progress. It called for a clear plan of action to begin rebuilding the confidence of shareholders and others.
Shareholders will have to consider how they vote at the retailer’s annual general meeting on 7 September with great care, the group said, after the company was rocked by a series of damaging revelations about the treatment of workers and its business practices. Shareholders will have to consider how they vote at the retailer’s annual general meeting on 7 September with great care, the investor group said, after the sportswear chain was rocked by a series of damaging revelations about the treatment of workers and its business practices.
Andy Griffiths, the executive director of the Investor Forum, said: “We do not take this step lightly and while we welcome Sports Direct’s move to hold an open day, we still have not received an appropriate level of commitment to respond to investor concerns and, as a result, the usual options have been exhausted.”Andy Griffiths, the executive director of the Investor Forum, said: “We do not take this step lightly and while we welcome Sports Direct’s move to hold an open day, we still have not received an appropriate level of commitment to respond to investor concerns and, as a result, the usual options have been exhausted.”
The statement comes a day after Sports Direct announced that it would open its doors to the public at the company’s AGM in Shirebrook, Derbyshire. Sports Direct is facing a rebellion by shareholders, with many planning to vote against the reappointment of Keith Hellawell as chairman.The statement comes a day after Sports Direct announced that it would open its doors to the public at the company’s AGM in Shirebrook, Derbyshire. Sports Direct is facing a rebellion by shareholders, with many planning to vote against the reappointment of Keith Hellawell as chairman.
In July, it was announced that thousands of warehouse workers will receive back pay totalling about £1m after the retailer admitted breaking the law by not paying the national minimum wage. A Guardian investigation last year exposed the fact that Sports Direct workers were being paid less than the legal requirement. The company and its employment agencies face fines of up to £2m. In July, it was announced that thousands of warehouse workers would receive back pay totalling about £1m after the retailer admitted breaking the law by not paying the national minimum wage. A Guardian investigation last year exposed the fact that Sports Direct workers were being paid less than the legal requirement. The company and its employment agencies face fines of up to £2m.
The Investor Forum called on the retailer to carry out a “wide-reaching independent review of the entire governance practices at the company,” as recommended by a select committee, not just its employment practices. Other areas include corporate governance and board oversight and effectiveness, acquisition strategy and associated due diligence, and oversight of key supplier relationships and the management of the store portfolio.The Investor Forum called on the retailer to carry out a “wide-reaching independent review of the entire governance practices at the company,” as recommended by a select committee, not just its employment practices. Other areas include corporate governance and board oversight and effectiveness, acquisition strategy and associated due diligence, and oversight of key supplier relationships and the management of the store portfolio.
The group said it did not regard the review of employment practices being carried out by RPC, Sports Direct’s lawyers, as independent, echoing the views of other shareholders. The recently announced external board evaluation “fails to reflect the breadth and magnitude of reform that is required”, it said.The group said it did not regard the review of employment practices being carried out by RPC, Sports Direct’s lawyers, as independent, echoing the views of other shareholders. The recently announced external board evaluation “fails to reflect the breadth and magnitude of reform that is required”, it said.
On Monday, it emerged that Sports Direct pays a company owned by the brother of its majority owner, Mike Ashley, to deliver online purchases to customers outside the UK.On Monday, it emerged that Sports Direct pays a company owned by the brother of its majority owner, Mike Ashley, to deliver online purchases to customers outside the UK.
Britain’s largest union, Unite, called on Sports Direct to tackle “endemic abuses” within its employment agencies and move longstanding agency workers on to direct, permanent contracts. Unite, which has been leading a campaign against “Victorian” work practices at Sports Direct, is urging shareholders to back a resolution at the AGM for an independent review into work practices.
The Unite assistant general secretary Steve Turner said: “Sports Direct has achieved a rare feat in uniting the City, politicians and Unite in the need to address deep-seated problems with its work practices and corporate governance.”