Shareholder revolt could oust Sports Direct bosses
Sports Direct boss Mike Ashley faces the prospect of an embarrassing shareholder revolt next week with investors set to admonish the firm over corporate governance failures.
Two influential advisory groups have recommended that shareholders in the retailer vote against the billionaire’s re-election as chief executive at the company’s annual general meeting on Wednesday.
Sports Direct’s founder and chief executive stands accused of a string of questionable practices, including handing millions to his daughter’s boyfriend for his role as a property consultant.
Advisory groups ISS and Pensions & Investment Research Consultants (Pirc) have also recommended voting against the re-election of chairman Keith Hellawell because he has lost shareholder confidence, and has failed to appoint any women directors to the board.
Mr Ashley sparked controversy after he paid £5 million to MM Prop Consultancy Limited, a company owned by Michael Murray, boyfriend of Anna Ashley.
Investors have been warned about Mr Ashley’s power over the company because he is the Sports Direct’s majority shareholder, and owns 61% of the group.
As such, he does not face any real prospect of being voted out, but independent investors will have a chance to express their anger over the way the firm is run.
In a note to shareholders, Pirc said: “His position on the board and level of shareholding 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.”
ISS said investors should not support the re-election of both Mr Ashley and Mr Hellawell due to the firm’s “apparent unwillingness to fully address the concerns of independent shareholders”.
“These concerns are exacerbated this year by the appointment of Michael Murray – domestic partner of Mike Ashley’s daughter – to a key management role alongside a proposed £5 million payment for his property consultancy work,” ISS said.
Mr Murray has been charged with leading the overhaul of Sports Direct’s property portfolio, part of Mr Ashley’s plan to make the company the “Selfridges of sport”.