Two major investment firms are set to join a revolt against Sports Direct’s corporate governance at a crunch AGM on Wednesday.
Royal London and Hermes will vote against several board appointments.
Royal London Asset Management, which owns a £2.75m stake in the retailer, also pushed Sports Direct to commission an independent external review into its working practices. The company published its internal working practices review today. It comes after MPs likened its warehouse in Shirebrook, Derbyshire to a “Victorian workhouse”.
And last night Sky News’ Mark Kleinman reported that Hermes Investment Management will vote against the firm’s chairman, senior independent director, and the head of its remuneration committee.
Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said: “We are astonished at the lack of improvement in corporate governance matters at Sports Direct, despite repeated attempts by ourselves and other investors to push for positive changes at the firm.”
She added that a series of scandals had wiped 60 per cent off Sports Direct’s share price since its AGM last year, despite slight increases in revenues and gross profits. “[This] is a clear sign of the impact which severe corporate governance issues can have on investors’ long term outlook for a company,” Hamilton Claxton said.
Shareholder Legal and General, shareholder advisory groups Glass Lewis and ShareSoc, the influential Pensions and Investment Research Consultants and Investor Forum have all called for a shake up at Sports Direct ahead of the AGM.
Royal London said it is voting against the re-election of non-executive directors at Sports Direct for the third year in a row, and will vote against the re-election of the retailer’s chairman Keith Hellawell for the second consecutive year.
“We agree with other investors that the chairman should resign, with a new chairman to be appointed within the next six months. We are voting against the non-executive directors yet again, to express our frustration that governance has not improved,” Hamilton Claxton said.
“It is also unacceptable for a FTSE-listed firm to operate for nearly three years without a permanent finance director in place and we would like to see this position filled.”
“We strongly reiterate our belief that improved governance would have a very positive impact for Sports Direct. We think that Mike Ashley has the potential to grow a highly successful business and believe that investors would be a lot more optimistic should the company start delivering the changes we are calling for.”
A spokesman for Sports Direct said: “We are looking forward to meeting with shareholders at the AGM and open day at Shirebrook on Wednesday.”