Sports Direct shareholders to vote on fate of chairman this week, following investors' revolt at AGM

 
Hayley Kirton
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Chief exec Mike Ashley holds the majority of the company's shares (Source: Getty)

Sports Direct shareholders will meet on Thursday to decide whether the retailer's chairman should keep his seat.

Dr Keith Hellawell, a former chief constable in his 70s, failed to find favour with investors in the company's annual general meeting in September, with just 47 per cent of independent shareholders voting to keep him as chair.

Although the company came out fighting to hold onto Hellawell, recently introduced rules mean Sports Direct's shareholders must be given a second vote if he is to keep his position.

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Sports Direct founder Mike Ashley, who also took up the role of chief executive at the firm last September, could be the decider of Hellawell's fate, as he holds 55 per cent of the company's shares and Thursday's vote depends on approval from the majority of all shareholders, not the majority of independent shareholders. Ashley has previously come out in favour of his chairman.

Meanwhile, shareholder advisory group Glass Lewis has recommended investors vote in favour of keeping Hellawell as chairman.

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"While we acknowledge that many shareholders may choose not to support Hellawell's re-election...we are cognisant of the need for continuity in the leadership of the board, particularly in this period of flux," a note from Glass Lewis read.

Ashley taking up the reins of the company is far from the only move on the board since the AGM, with acting finance boss Matt Pearson tendering his resignation within a month of Dave Forsey's departure as chief exec and former banker David Brayshaw joining as a non-executive director in December.

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"The board believes that the re-election of Dr Hellawell, when combined with the appointment of David Brayshaw, will provide a balance of continuity and fresh, independent insight," Sports Direct wrote in a letter to its shareholders informing them of Thursday's general meeting.

The quality of corporate governance at the retail chain was called into question on numerous occasions last year. In particular, a report from the Business, Innovation and Skills select committee slammed the company for running its Shirebrook warehouse like a "Victorian workhouse".

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Investors are also likely less than impressed with the company's share price performance over the last year. Shares closed 2016 at around half the price they were trading for at the start of the year. The firm's floundering share price caused it to be booted out of the FTSE 100 last March.

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Hellawell, who has previously served as the government's drugs czar, has said, if shareholders back his position at this week's general meeting but the majority of independent shareholders do not vote to support him at the company's AGM later in the year, he will step down immediately.

Sports Direct did not immediately respond to City A.M.'s request for comment.

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