Sports Direct investors are being advised to vote against both founder Mike Ashley and chairman Keith Hellawell retaining their seats on the board ahead of next week's AGM.
Investor group Pirc is recommending six of the 15 resolutions be opposed, and three abstained. Its biggest concern was the large number of staff employed on zero-hour contracts, and the fact 88 people were left redundant without any warning after the collapse of USC at the start of the year. There are also concerns regarding Sports Direct's failure to "adequately discuss human rights".
As a result, it is advising investors to vote against the annual report.
On top of that, Pirc is calling for Hellawell to be dropped, claiming that “the chair's responsibilities have been poorly managed”.
“This is evident in relation to Mr Hellawell not being aware that the USC, a subsidiary of the company, was going into administration until a day before, despite the executive directors at the time having already met with administrators,” the shareholder group said.
Hellawell was grilled by MPs in March over the "callous" way Sports Direct handled the administration – but on several points he was unable to give any answer at all.
Meanwhile Ashley's position “raises significant concerns about his influence on the board and whether the other directors can objectively challenge and influence the board’s decision making process,” Pirc said.
It also noted that the founder – who owns 55.14 per cent of Sports Direct – missed four board meetings.
The body said there appeared to be “a lack of communication among the members of the board, which put into question the competency of the board as a whole”.
Among other resolutions Pirc takes a stance against are Sports Direct's remuneration policy for not being “sufficiently long-term”. It also wants new auditors and to reduce any issue of shares for cash from 10 to five per cent.
Sports Direct's AGM will take place on 9 September. Last year it appeared that Ashley was the least popular member of the board, with 13.5 per cent of the vote going against him.