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Sports Direct's Mike Ashley faces shareholder unrest at annual meeting Sports Direct investors rebel against Mike Ashley
(about 1 hour later)
Mike Ashley faced shareholder unrest again at Sports Direct's meeting with investors on Wednesday. Sports Direct shareholders have registered unhappiness with founder Mike Ashley, voting in large numbers against his re-election as director.
Some major investors believe founder Mike Ashley, who owns more than 62%, has too much control over the retailer. Mr Ashley owns 62% of the company, so was overwhelmingly backed to continue in the role as expected.
The firm has been criticised for several "strange missteps", including its House of Fraser purchase. However, almost a quarter independent shareholders voted against his re-election.
A major bone of contention at the meeting was the appointment of an auditor, after Grant Thornton resigned in August. Sports Direct is under pressure to appoint a new auditor, but shareholders were told no decision had been made.
Tom Powdrill, of investor advisory group Pirc, said that if Sports Direct cannot appoint an auditor at the close of the meeting, the Department for Business, Energy and Industrial Strategy has the power to step in if necessary. Mr Ashley has been criticised for a spending spree which has seen the Sports Direct buy numerous struggling retailers. His retail empire includes large swathes of the High Street.
He told the BBC that the situation at the company is "is absolutely unprecedented", adding: "This is Sports Direct all over. It has set a number of precedents, unfortunately they are all bad ones. He bought House of Fraser for £90m last year saying he wanted to turn it into the "Harrods of the High Street".
"Sports Direct has been through a very turbulent period and made a number of strange missteps," he added, citing the House of Fraser acquisition, a delay in publishing its results, and problems appointing an auditor. Sports Direct later said it regretted the acquisition, describing problems at House of Fraser as "nothing short of terminal".
Pirc opposes the re-election of Mr Ashley as chief executive. However, Mr Ashley holds more than 62% of the shares of the firm, so has a controlling interest. "Sports Direct has been through a very turbulent period and made a number of strange missteps," Tom Powdrill, of investor advisory group Pirc, said ahead of the meeting.
In particular he noted the House of Fraser acquisition, a delay in publishing its results, and problems appointing an auditor.
Sports Direct's relations with some investors have been turbulent for a number of years. For example, in 2016 shareholders moved to depose the then chairman Keith Hellawell.Sports Direct's relations with some investors have been turbulent for a number of years. For example, in 2016 shareholders moved to depose the then chairman Keith Hellawell.
The media was barred from the meeting, but Press Association city editor Simon Neville bought one Sports Direct share on Monday, which allowed him to attend. In a statement, Sports Direct said: "Mike Ashley was re-elected... with over 90% of the vote and the audited accounts for the year ended 28 April 2019 were also approved by over 99% of shareholders."
He tweeted that the firm said it is "in the middle of a process" with regard to getting an auditor, and that the board wouldn't answer whether Sports Direct will appoint one soon.
Investor unrestInvestor unrest
Shareholder ISS has also recommended voting against Mr Ashley's re-election, citing "material failures of governance and risk oversight, many of which remain unresolved" over recent years. Shareholder ISS recommended voting against Mr Ashley's re-election, citing "material failures of governance and risk oversight, many of which remain unresolved" over recent years.
Fidelity International's Maike Currie told the BBC that shareholders have questions over the firm's performance and Mr Ashley's recent shopping spree. The businessman has bought a number of ailing retailers in the last two years.Fidelity International's Maike Currie told the BBC that shareholders have questions over the firm's performance and Mr Ashley's recent shopping spree. The businessman has bought a number of ailing retailers in the last two years.
Another issue is the appointment of an auditor, after Grant Thornton resigned in August. But the meeting was told that the company is still in the process of finding a new firm.
Mr Powdrill said earlier that if Sports Direct cannot appoint an auditor by the close of the meeting, the Department for Business, Energy and Industrial Strategy has the power to step in if necessary.
Shares in Sports Direct are down by about 25% in a year, and suffered a big drop in July after the Belgian government claimed Sports Direct owed it €674m (£605m) in taxes.Shares in Sports Direct are down by about 25% in a year, and suffered a big drop in July after the Belgian government claimed Sports Direct owed it €674m (£605m) in taxes.
Ms Currie said there were doubts over Mr Ashley's decision to buy House of Fraser and Jack Wills. There are also reports that Sports Direct is bidding for High Street jeweller Links of London.Ms Currie said there were doubts over Mr Ashley's decision to buy House of Fraser and Jack Wills. There are also reports that Sports Direct is bidding for High Street jeweller Links of London.
Mike Ashley already owns large swathes of the High Street. He bought House of Fraser for £90m last year saying he wanted to turn it into the "Harrods of the High Street". Mr Ashley's recent purchases include, Evans Cycles, upmarket clothing outlets Flannels and Cruise, and lingerie firm Agent Provocateur. Sports Direct is also in the process of taking control of Game Digital.
Sports Direct later said it regretted the acquisition, describing problems at House of Fraser as "nothing short of terminal". Earlier this year, Mr Ashley tried to become chief executive of Debenhams, but instead his stake in the chain was wiped out when the retailer was taken over by its lenders.
He has also bought Evans Cycles and owns several sportswear brands, upmarket clothing outlets Flannels and Cruise, and lingerie firm Agent Provocateur. Sports Direct is also in the process of taking control of Game Digital.
Earlier this year, he tried to become chief executive of Debenhams, but instead his stake in the chain was wiped out when the retailer was taken over by its lenders.
Mr Ashley has also failed in a bid for music retailer HMV and pulled out of bidding for cafe chain Patisserie Valerie.Mr Ashley has also failed in a bid for music retailer HMV and pulled out of bidding for cafe chain Patisserie Valerie.