Legal & General Investment Management (LGIM) has joined calls from shareholder groups for a review of corporate governance at Sports Direct.
The group said it would be voting against the re-election of non-executive directors at Sports Direct because the company "needs a stronger body of independent non-executive directors to ensure the business is run in the interest of all shareholders."
"We also fully support the statement, released today, from the Investor Forum, of which we are a member, calling for an independent review of overall governance practices," said Sacha Sadan, director of corporate governance at LGIM. "We believe that all shareholders should send a strong signal to Sports Direct calling for change."
Sadan said LGIM were going to vote against Sports Direct's chairman, former police officer Keith Hellawell, for the third year in a row, because this is what has happened to the company's share price since 2014:
The Investor Forum, which represents 27 per cent of the independent shareholders at Sports Direct, has called for a "wide-reaching" independent review of governance practices at Sports Direct, focussing on related party transactions, employment practices and supplier relationships.
The intervention came after the Pensions and Investment Research Consultants (Pirc) said investors should oppose the re-election of board members at Sports Direct's AGM. The company's founder, Mike Ashley, was too powerful to be opposed by other board members, Pirc argued.
Mike Ashley is not the only one taking a bashing today - Sports Direct's share price is down three per cent at time of writing.
To top things off for Sports Direct, the AGM will be public - because the company has invited everyone to come along.
There have been no new non-executive board appointments at Sports Direct, LGIM said, which was a cause for concern.
Oliver Parry, head of corporate governance at the Institute of Directors, said: "The IoD has for some time had concerns about the ability of Sport Direct’s board to make sure the company is run for the benefit of all shareholders, so it is pleasing to see the investment community addressing the issue head-on.
"Political pressure for governance reform has been increasing in recent months, but for long-lasting change, investors are going to have to pull their weight."
Parry said "there is a good chance" the government will intervene on corporate governance issues if investors don't pull their weight. In particular, there are still big issues around how companies calculate performance-related pay and the diversity of boards, he said.
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