Sports Direct investors press for review of its practices
A group of influential investors are urging Sports Direct to overhaul the way it is run.
The Investor Forum, which has £14.5 trillion of investments, says the company should conduct a thorough independent review. Investors are uncomfortable about the company's illegal underpayment of staff and an unusual arrangement with founder Mike Ashley's brother over deliveries. Concerns have been raised at the highest level. The Investor Forum wants Sports Direct to address a comprehensive list of issues: The organisation says this "highly unusual" public call for a review is necessary to rebuild the company's reputation. The public call comes as Sports Direct's board faces mounting pressure. In June, Mike Ashley, who is known for being publicity-shy, but outspoken in his views, faced intensive questioning by MPs over the way his company was run, following a Guardian investigation that revealed his staff were being kept at work for searches for such long periods of time that their pay dropped below the legal minimum wage. MPs also heard workers' stories alleging they were so worried about their jobs that they feared to call in sick, resulting in a number of ambulances being called to the warehouse in Shirebrook in Derbyshire. This week, the revelation of the distribution arrangement with Mr Ashley's brother has drawn the attention of City regulator the Financial Reporting Council, which is said to be looking into the agreement and why it was not disclosed in Sports Direct's annual report. Unusual The UK's largest union, Unite, backed demands from the Investor Forum for a thorough, independent review of the retailer. It called on Sports Direct to confront "endemic abuses"' within its labour supply agencies and move long-standing agency workers on to direct, permanent contracts. Major shareholder Royal London Asset Management recently said it had "lost confidence" in the directors of the retailer to protect the interests of investors other than Mr Ashley, who owns more than 50% of the business he founded in 1982. Shareholders will be able to voice their feelings about the company at the annual shareholders meeting on 7 September, which it said on Wednesday would be open to all interested parties - an unusual move for any company, whose AGM is generally restricted to those who own a stake in the business. They will have no active voice in proceedings. 'Disappointed' A number of those that do are expected to rebel against the board, particularly against the reappointment of Keith Hellawell as chairman. Legal & General Investment Management is a major shareholder and a member of the Investor Forum lobby group. Sacha Sadan, director of corporate governance at the fund said: "For the third consecutive year we will be voting against the re-election of the chairman at Sports Direct. "We will also be voting against the re-election of all non-executive directors as we believe that Sports Direct needs a stronger body of independent non-executive directors to ensure the business is run in the interest of all shareholders. We are disappointed that there have been no new non-executive board appointments in the last five years." 'So low' Independent retail analyst Nick Bubb commented: "It remains to be seen how 'open' Sports Direct will be at its 'open day' on 7 September, but management have clearly calculated that the company's reputation is so low that it can only get better, despite the constant risk that Mike Ashley says something stupid." The BBC asked Sports Direct for a comment on the call for a review of the company. Mr Ashley's spokesman sent a brief email which did not directly address that but said it "[acknowledged] the appreciation of [Mr Ashley's] efforts in terms of hosting an open day." It continued: "He looks forward to meeting everyone and answering all your questions." The company's shares were down 2% in early Thursday trading at 304p. They have fallen around 50% since the start of this year.