Sports Direct could face a shareholder revolt over its share buyback plan this week, as investors prepare to oppose the resolution at the retailer's annual general meeting (AGM).
Ashley's control over Sports Direct has become a sore point for the retailer's independent investors. Institutional shareholders called for an independent review of the company's corporate governance last year, but were left unsatisfied when Ashley appointed RPC, a law firm connected with Sports Direct, to conduct the review.
A shareholder revolt against Sports Direct's chairman Keith Hellawell is also brewing. After independent investors voted against him at the AGM last year, and at an extraordinary general meeting in January, Hellawell has promised to step down if he fails to gain their support this week.
In reports sent to shareholders, seen by City A.M., advisory groups including Glass Lewis and Institutional Shareholder Services recommended a vote against Hellawell at the AGM.
Pensions & Investment Research Consultants (Pirc) said Hellawell was unable to represent the best interests of shareholders, and that the board had failed to address issues surrounding its working practices.
Last year, Sports Direct was hit by revelations of poor working practices in its Shirebrook warehouse. A parliamentary inquiry concluded the warehouse was run like a "Victorian workhouse".
Sports Direct has recommended shareholders vote in favour of keeping Hellawell, and has said he has the full support of directors.