Sports Direct attempted to fix its tattered public image today by publishing a report on its review of working practices - but shareholder advisory groups are unmoved by Mike Ashley's last-ditch efforts to avoid an investor revolt at his company's annual general meeting.
City A.M. understands that influential advisory group Glass Lewis has not changed its position on Sports Direct because the report has failed to properly address worries about corporate governance at the retailer.
Sports Direct admitted to serious shortcoming in the working practices at its Shirebrook warehouse in the report out today, and said it would conduct a further review of corporate governance at the firm.
But Glass Lewis maintains its advise to shareholders, saying they should vote against Ashley's re-election to Sports Direct's board at the company's AGM tomorrow. In a report seen by City A.M., the group told investors that Ashley - executive chairman and majority shareholder of Sports Direct - is "inextricably linked" to the retailer's "poor public perception and associated halving of its share price over the past year".
Advisory firm Pensions and Investment Research Consultants (Pirc) reacted similarly to the report and has suggested it is little more than a PR exercise.
Pirc said: "Making announcements at such a late hour, after votes have been cast, suggests this is more about public relations than the business of the AGM.
"If the company was serious about something substantially new then it should delay the AGM."
The report has been conducted by law firm RPC, which has been working for Ashley for some time, throwing into question whether it can act independently.
Hermes Investment Management, which provides advice to some of Sports Direct's investors, told City A.M.: "It's always better if there is an independent report" but that the 88-page document represented a "real step forward."
Leon Kamhi, head of responsibility at Hermes Investment Management, said the firm still wanted to see an independent review of corporate governance at Sports Direct, and had not changed it's stance on the board, and would like to see chairman Keith Hellawell step down.
Investor group ShareSoc has also told its members to vote for a corporate governance review, but ShareSoc's director Cliff Weight has described today's publication as a "triumph for shareholders".
"This report has highlighted the dangers of having an over-powerful chairman," Weight said. "But this is a triumph for shareholders - it proves shareholders can make things happen."
Oliver Parry, head of corporate governance policy at the Institute of Directors, said the report is "nowhere near a whitewash", adding:
There needs to be a fuller investigation with respect to governance, and it needs to be independent of this law firm. I don’t this report will placate investors' concerns about corporate governance, but it has addressed the issue of working practices.