Large shareholders in Sports Direct are considering voting against the reappointment of the company’s chairman and other directors at next month’s annual general meeting in a bid to force change at the top of the embattled chain. Keith Hellawell, who has been chairman since 2009, will be the main target at the AGM on 7 September. At last year’s meeting, almost 24% of independent shareholders’ votes went against him. After a year in which the company’s reputation has been battered by the Guardian’s revelations about its treatment of employees and declining financial performance, critics expect more shareholders to vote against Hellawell and other non-executive directors. The admission of Mike Ashley, Sports Direct’s founder and majority owner, to MPs that the company had become too big for him to control has added to concerns about how the it is managed. A source at a large fund manager said: “I can’t imagine the votes will be kinder to the board than they were last year, and they could be pretty striking numbers. It’s possible that the chairman could face a majority of independent shareholders voting against him based on last year’s result and a stiffening of the mood. “Mike Ashley told the select committee he has not got proper command and oversight of the company, and everything we’ve seen indicates that is a fair assessment. That is a strong indictment of every member of that board.” Sports Direct’s public relations advisers did not respond to a request for comment. New rules require minority investors to approve non-executive directors at companies where a single shareholder owns 30% or more. Ashley owns 55% of the company and is its executive deputy chairman. Sports Direct has become a test of shareholders’ willingness to use the new rule to press for change. “If not now, then when?” another fund management source said. If independent shareholders vote against Hellawell, Sports Direct can force his appointment through by holding another vote of all shareholders within 90 days. Large shareholders, however, also have long-running concerns. Standard Life voted against Hellawell, and other directors such as Simon Bentley, the former boss of Blacks Leisure, at last year’s AGM. Hellawell rejected calls to quit in March when Sports Direct dropped out of the FTSE 100. He said the company was working to improve relations with shareholders and that problems with its corporate governance were often overstated. As in previous years, Sports Direct will hold the AGM at its headquarters in Shirebrook, Derbyshire. The sprawling “campus” is also the location for the company’s giant warehouse, where a Guardian investigation last year found that workers were effectively paid less than the minimum wage. Ashley has since increased pay to above the minimum wage and started his own review of working conditions, which will be assessed by Sports Direct’s legal advisers RPC. The Unite trade union, however, is seeking City support for a resolution, opposed by Sports Direct, seeking an outside review of the treatment of employees. Large shareholders are considering adding to pressure on the board by sending representatives to the meeting. Hermes Investment Management, one of Britain’s biggest fund managers, said it would send a senior official. Some big shareholders believe Hellawell’s departure is needed for the company to show that it is serious about reforming its governance. Others said they would wait to see how negotiations turned out before deciding how to vote.
Major shareholders in Sports Direct are contemplating voting against the reappointment of the company’s chairman, Keith Hellawell, and other directors at the firm’s AGM in September. Of the independent shareholders’ votes, 24% were cast against Hellawell at the 2015 AGM. The Guardian understands that a number of investors have been approached by representatives from the Football Supporters’ Federation (FSF) to discuss their concerns about the future direction of the club. The upcoming AGM is seen as a potential test of new rules requiring minority investors to grant approval to non-exec directors in companies where an individual shareholder controls 30% of shares; Sports Direct’s founder, Mike Ashley, owns 55% of the company.